The amount of money a company has available to run its day-to-day operations, calculated by subtracting current liabilities from current assets. Current assets are things that can be converted to cash within one year (like cash, inventory, and accounts receivable). Current liabilities are debts due within one year (like bills and short-term loans).
A manufacturing company has current assets of $300,000 including $50,000 cash and $250,000 in inventory. It has current liabilities of $100,000 in bills due this year. Its working capital is $200,000, meaning it has enough resources to cover near-term obligations and keep operating.
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