The amount of
money a company has on hand, or will have, in a given year. Working capital is calculated by subtracting
current liabilities from
current assets. That is, one takes the
value of all
debts and obligations for the current year and subtracts that from the value of all
cash and
assets that might reasonably be converted into cash in the current year. This is a good measure of the short and medium-term
financial health of a company, and may indicate by how much it can expand its operations without resorting to
borrowing or another
capital raising tactic. Working capital is also called operating assets or net current assets.