current assets less current liabilities, properly callednet working capital. Working capital is a measure of a company's liquidity. Sources of working capital are (1) net income, (2) increase in noncurrent liabilities, (3) increase in stockholders' equity, and (4) decrease in noncurrent assets.
- current assets of an organization, especially cash, accounts receivable, and inventory. Also called liquid capital. Definitions of the term vary. An alternative definition is net working capital, or the excess of current assets over current liabilities. A firm's working capital ratio (current assets divided by current liabilities) is a measure of its liquidity,
- earning assets of an organization, including marketable securities,receivables, and inventory, which can be converted to cash if needed.
funds invested in a company's cash, accounts receivable, inventory, and other current assets (gross working capital). It usually refers to net working capital, that is, current assets minus current liabilities. Working capital finances the cash conversion cycle of a business-the length of time required to convert raw materials into finished goods, finished goods into sales, and accounts receivable into cash.
funds invested in a company's cash, accounts receivable, inventory, and other current assets (gross working capital); usually refers to net working capital-that is, current assets minus current liabilities. Working capital finances the cash conversion cycle of a business-the time required to convert raw materials into finished goods, finished goods into sales, and accounts receivable into cash. These factors vary with the type of industry and the scale of production, which varies in turn with seasonality and with sales expansion and contraction. Internal sources of working capital include retained earnings, savings achieved through operating efficiencies and the allocation of cash flow from sources like depreciation or deferred taxes to working capital. External sources include bank and other short-term borrowings, trade credit, and term debt and equity financing not channeled into long-term assets.
