working capital
Definition 1
General: Cash available for day to day operations of a firm. Strictly speaking, one borrows cash (and not working capital) to be able to buy assets or to pay for obligations. Also called current capital.
Definition 2
Accounting: Net liquid assets computed by deducting current liabilities from current assets. Sources of working capital are (1) net income, (2) long-term loans (non-current liabilities), (3) sale of capital (non-current) assets, and (4) injection of funds by the owners (stockholders). Amount of available working capital is a measure of a firm's ability to meet its short-term obligations. Ample working capital allows management to avail of unexpected opportunities, and to qualify for bank loans and favorable trade credit terms. In the normal trade cycle of a firm, working capital equals working assets.
working capital is in the Accounting & Auditing and Entrepreneurship, Management, & Leadership subjects.
working capital appears in the definitions of the following terms:
long term debt to total assets ratio,
net current assets,
long term debt to total working capital ratio,
statement of sources and application of funds,
capital investment,
application of funds,
operating capital,
overtrading,
marginal account,
capital requirements
and
working capital appears in these other terms: short term debt to working capital, average working capital, working capital to sales ratio, net working capital, working capital turnover, inventory to working capital ratio, days working capital, net income to working capital ratio
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