{"id":499,"date":"2025-03-12T10:58:00","date_gmt":"2025-03-12T10:58:00","guid":{"rendered":"https:\/\/www.experlu.co.uk\/dictionary\/?p=499"},"modified":"2025-03-26T08:27:15","modified_gmt":"2025-03-26T08:27:15","slug":"working-capital","status":"publish","type":"post","link":"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/","title":{"rendered":"Working Capital"},"content":{"rendered":"\n

What is Working Capital?<\/h2>\n\n\n\n

Working Capital means the net liquid funds maintained by an organisation to manage the business’s day-to-day running expenses, whether in the form of cash, bank deposits, or in any other way. In other words, working capital is current assets less current liabilities.<\/p>\n\n\n\n

Working Capital formula
<\/h3>\n\n\n\n

Working capital = Current assets \u2013 Current liabilities<\/strong><\/p>\n\n\n\n

Current assets are usually convertible into cash and cash equivalent within twelve months. Examples are accounts receivable- unpaid customer invoices, raw materials and finished goods inventories, prepayments.<\/p>\n\n\n\n

Current liabilities are short term liabilities due within twelve months. Examples are accounts payable- unpaid supplier bills, VAT<\/a><\/strong> payable, employees salaries, rent payable.<\/p>\n\n\n\n

The working capital formula measures short-term liquidity and helps financial analysis, financial modelling, and cash flow management.<\/p>\n\n\n\n

Working capital (positive vs negative)<\/h2>\n\n\n\n

Positive working capital<\/strong><\/h3>\n\n\n\n

\u25cf Working Capital is positive when current assets are greater than current liabilities.
\u25cf It can be a good indicator of a company’s short-term financial health because it has sufficient liquid assets to pay off short-term bills and internally finance business growth.
\u25cf Too much working capital indicates that there are either excessive inventories or surplus cash that remains uninvested.<\/p>\n\n\n\n

Negative working capital<\/strong><\/h3>\n\n\n\n

\u25cf Working Capital is positive when current liabilities are greater than the current assets.
\u25cf It indicates that assets are not used efficiently, and a company may be facing a liquidity issue.
\u25cf Even if a company has heavily invested in fixed assets, it will face financial and operational difficulties if it cannot pay its current liabilities on time.<\/p>\n","protected":false},"excerpt":{"rendered":"

What is Working Capital? Working Capital means the net liquid funds maintained by an organisation to manage the business’s day-to-day running expenses, whether in the form of cash, bank deposits, or in any other way. In other words, working capital is current assets less current liabilities. Working Capital formula Working capital = Current assets \u2013 […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[61],"class_list":["post-499","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-working-capital"],"yoast_head":"\nWhat is working capital?<\/title>\n<meta name=\"description\" content=\"Working Capital means the net liquid funds maintained by an organisation to manage the business's day-to-day running expenses.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is working capital?\" \/>\n<meta property=\"og:description\" content=\"Working Capital means the net liquid funds maintained by an organisation to manage the business's day-to-day running expenses.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/\" \/>\n<meta property=\"og:site_name\" content=\"Experlu Dictionary\" \/>\n<meta property=\"article:published_time\" content=\"2025-03-12T10:58:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-03-26T08:27:15+00:00\" \/>\n<meta name=\"author\" content=\"Experlu Admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Experlu Admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/\",\"url\":\"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/\",\"name\":\"What is working capital?\",\"isPartOf\":{\"@id\":\"https:\/\/www.experlu.co.uk\/dictionary\/#website\"},\"datePublished\":\"2025-03-12T10:58:00+00:00\",\"dateModified\":\"2025-03-26T08:27:15+00:00\",\"author\":{\"@id\":\"https:\/\/www.experlu.co.uk\/dictionary\/#\/schema\/person\/99453619ad21037bc151f20b15dd3f65\"},\"description\":\"Working Capital means the net liquid funds maintained by an organisation to manage the business's day-to-day running expenses.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/#breadcrumb\"},\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.experlu.co.uk\/dictionary\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Working Capital\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.experlu.co.uk\/dictionary\/#website\",\"url\":\"https:\/\/www.experlu.co.uk\/dictionary\/\",\"name\":\"Experlu Dictionary\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.experlu.co.uk\/dictionary\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-GB\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.experlu.co.uk\/dictionary\/#\/schema\/person\/99453619ad21037bc151f20b15dd3f65\",\"name\":\"Experlu Admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-GB\",\"@id\":\"https:\/\/www.experlu.co.uk\/dictionary\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/608c6b42c554f626552cb49dd92abf957a2dae9b6577cca2f3c9db4b300fcaa0?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/608c6b42c554f626552cb49dd92abf957a2dae9b6577cca2f3c9db4b300fcaa0?s=96&d=mm&r=g\",\"caption\":\"Experlu Admin\"},\"url\":\"https:\/\/www.experlu.co.uk\/dictionary\/author\/aarifhabeeb\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What is working capital?","description":"Working Capital means the net liquid funds maintained by an organisation to manage the business's day-to-day running expenses.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/","og_locale":"en_GB","og_type":"article","og_title":"What is working capital?","og_description":"Working Capital means the net liquid funds maintained by an organisation to manage the business's day-to-day running expenses.","og_url":"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/","og_site_name":"Experlu Dictionary","article_published_time":"2025-03-12T10:58:00+00:00","article_modified_time":"2025-03-26T08:27:15+00:00","author":"Experlu Admin","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Experlu Admin","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/","url":"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/","name":"What is working capital?","isPartOf":{"@id":"https:\/\/www.experlu.co.uk\/dictionary\/#website"},"datePublished":"2025-03-12T10:58:00+00:00","dateModified":"2025-03-26T08:27:15+00:00","author":{"@id":"https:\/\/www.experlu.co.uk\/dictionary\/#\/schema\/person\/99453619ad21037bc151f20b15dd3f65"},"description":"Working Capital means the net liquid funds maintained by an organisation to manage the business's day-to-day running expenses.","breadcrumb":{"@id":"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/#breadcrumb"},"inLanguage":"en-GB","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.experlu.co.uk\/dictionary\/working-capital\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.experlu.co.uk\/dictionary\/"},{"@type":"ListItem","position":2,"name":"Working Capital"}]},{"@type":"WebSite","@id":"https:\/\/www.experlu.co.uk\/dictionary\/#website","url":"https:\/\/www.experlu.co.uk\/dictionary\/","name":"Experlu Dictionary","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.experlu.co.uk\/dictionary\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-GB"},{"@type":"Person","@id":"https:\/\/www.experlu.co.uk\/dictionary\/#\/schema\/person\/99453619ad21037bc151f20b15dd3f65","name":"Experlu Admin","image":{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/www.experlu.co.uk\/dictionary\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/608c6b42c554f626552cb49dd92abf957a2dae9b6577cca2f3c9db4b300fcaa0?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/608c6b42c554f626552cb49dd92abf957a2dae9b6577cca2f3c9db4b300fcaa0?s=96&d=mm&r=g","caption":"Experlu Admin"},"url":"https:\/\/www.experlu.co.uk\/dictionary\/author\/aarifhabeeb\/"}]}},"_links":{"self":[{"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/posts\/499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/comments?post=499"}],"version-history":[{"count":4,"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/posts\/499\/revisions"}],"predecessor-version":[{"id":1195,"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/posts\/499\/revisions\/1195"}],"wp:attachment":[{"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/media?parent=499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/categories?post=499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.experlu.co.uk\/dictionary\/wp-json\/wp\/v2\/tags?post=499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}