Working Capital Basics | Bizcap SME Glossary

Working Capital

What is Working Capital?

Working capital is the difference between a business’s current assets and current liabilities. It’s a vital measure of short-term financial stability.

Explanation

Working Capital Formula:

Working Capital = Current Assets - Current Liabilities

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Positive working capital means:

The business can meet its financial obligations.
There is flexibility to invest in opportunities.

Negative working capital can lead to:

Missed payments
Operational stress
Potential insolvency

Practical Example of Working Capital

If a company has £150,000 in cash, stock, and receivables, and £90,000 in short-term debts, it has £60,000 of working capital available to support growth or weather downturns.

How Bizcap Can Help:
If your working capital is stretched, Bizcap can offer tailored business loans to inject liquidity and give you the breathing room needed for sustainable operations.

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