Answers the Question
How easily can a company deal with an unexpected problem?
Calculator for Working Capital
What Is the Working Capital?
Working capital is a measure of how well a company can weather an unexpected storm or take advantage of unexpected opportunities.
Why Is it Important?
- The less working capital available, the more likely a firm will be required to take on additional debt or sell off productive assets.
Formula(s) to Calculate Working Capital
- WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES
- Different industries will require different quantities of working capital. It is improper to assume that a firm in one field will require the same quantity as another.
- This does not take the size of a business into account. Smaller companies will naturally have lower quantities of working capital, but they will also tend to have lower requirements.