Working capital is a financial ratio representing the difference between a company's current assets and current liabilities. It is a measure of a company's ability to cover its short-term liabilities with short-term assets. In practice, this means that working capital helps to assess a company's liquidity, i.e. its ability to quickly convert assets into cash to meet its current liabilities. Working capital is a key indicator for assessing a company's financial health. Positive working capital, a situation in which the value of current assets exceeds the value of current liabilities, indicates that a company has sufficient funds to cover its short-term liabilities and continue to operate.
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