Working capital
#12GUIDING QUESTION
Do you have liquidity to spare for day-to-day operations?
The difference between short-term resources and short-term debts: your operating cushion.
01.What it is
It shows whether current assets cover current liabilities. Positive = cushion.
02.Component masses
- Current assets
- Current liabilities
03.Formula
MAIN FORMULA
Working capital: Current assets − Current liabilities(€)
04.Interpretation
- Positive → security.
- Zero → just balanced.
- Negative → warning.
05.Related to
- Current ratio
- Cash conversion cycle