ACCOUNTING GLOSSARY
Working Capital
Working Capital
Current assets minus current liabilities.
What does Working Capital mean?
Current assets minus current liabilities. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Working Capital in context
$900,000 of current assets less $600,000 of current liabilities equals $300,000 working capital.
Why it matters in financing
Working Capital can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related accounting terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.