Working Capital
What is Working Capital?
Working capital is the difference between a business’s current assets and current liabilities. It’s a vital measure of short-term financial stability.
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Explanation
Working Capital Formula:
Working Capital = Current Assets - Current Liabilities
Positive working capital means:
- The business can meet its financial obligations.
- There is flexibility to invest in opportunities.
Negative working capital can lead to:
- Missed payments
- Operational stress
- Potential insolvency
Practical Example of Working Capital
If a company has £150,000 in cash, stock, and receivables, and £90,000 in short-term debts, it has £60,000 of working capital available to support growth or weather downturns.
How Bizcap Can Help:
If your working capital is stretched, Bizcap can offer tailored business loans to inject liquidity and give you the breathing room needed for sustainable operations.
