understanding financial jargon
The working capital of a business is the difference between the firms current assets (such as cash, debtors, and easily liquidated assets) and it's current liabilities (debts payble within 12 months). The working capital provides a snap-shot of the ability of a company to pay it's short term debts.
A reasonable positive value means the firm is unlikely to go out of business by being unable to pay it's creditors, but too high a value might indicate the business is inefficient, for example by holding too much cash that could be better invested elsewhere in the business, or allowing customer debt to build up. Working capital is also known as 'net current assets'.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
We hope you found this information useful.
Copyright © Steve Gears Associates. All rights reserved. No portion of this site may be reproduced without written permission. All Trademarks are freely acknowledged.The information on this site is based on UK data unless otherwise indicated. Non-UK visitors should check with experts within their own legal jurisdiction before relying on information presented here.