Working Capital

Working Capital is calculated as Current Assets minus Current Liabilities. It indicates whether a business can meet its short-term obligations using its available resources. Positive working capital suggests good liquidity, while negative working capital may signal cash flow issues. For startups, managing working capital is critical to ensure smooth day-to-day operations, especially when dealing with delayed payments or upfront expenses. Efficient working capital management improves financial stability and reduces reliance on external funding.