Working Capital

Working Capital (WC) is a measure of a company’s liquidity, operational efficiency, and short-term financial health. If a company has substantial positive WC, then it should have the potential to invest and grow. If a company’s current assets do not exceed its current liabilities, then it may have trouble growing or paying back creditors. It might even go bankrupt. A company has negative WC if its ratio of current assets to liabilities is less than one.