Working capital stands for : (2024)

FAQs

Working capital stands for :? ›

Working capital is the liquid funds that a business has available to meet short-term financial obligations. The amount of working capital a business has is calculated by subtracting current liabilities from current assets.

Working capital indicates the liquidity levels of businesses for managing day-to-day expenses and covers inventory, cash, accounts payable, accounts receivable and short-term debt. It is an indicator of the short-term financial position of an organisation and is also a measure of its overall efficiency.

Working capital is a financial metric that is the difference between a company's curent assets and current liabilities. As a financial metric, working capital helps plan for future needs and ensure the company has enough cash and cash equivalents meet short-term obligations, such as unpaid taxes and short-term debt.

Working capital is a common measure of a company's liquidity, efficiency, and overall health. It includes cash, inventory, accounts receivable, accounts payable, etc. It is calculated as the difference between current assets and current liabilities.

Liquidity working capital. refers to the relative composition thereof with emphasis on cash and marketable securities and how soon can the noncash items among the current assets be converted to cash.

Working capital is referred to as the capital that is essential for running the day to day operations of a business. Therefore, it is the difference between current liabilities and current assets.

What Is Working Capital? Working capital, also known as net working capital (NWC), is the difference between a company's current assets—like cash, accounts receivable/customers' unpaid bills, and inventories of raw materials and finished goods—and its current liabilities, such as accounts payable and debts.

Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities.

Regular working capital: This is the least amount of capital required to meet current working expenses under normal conditions. Some examples of this capital include salary and wage payments, materials and supplies, and overhead costs.

Short-term working capital refers to funds that help you finance the daily operations of your business. These include inventory or raw material purchase, staff salaries, warehouse or office rent, electricity and maintenance, short-term debt and more.

Which of the following describes working capital? ›

Correct answer: Option B) Current assets minus current liabilities. Explanation: Working capital depicts the difference between the current assets and the current liabilities.

Raw materials and money in hand are called working capital. Unlike tools, machines and buildings, these are used up in production.

In simple terms, it's the cash you have left once you have accounted for the money going out and the money coming into your business. Working capital is vital for running a healthy business. You need to be able to meet your financial obligations, such as paying employees and suppliers.