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Working Capital

The short-term money available to run day-to-day operations — what you own that can quickly become cash, minus what you owe soon.

Example

Enough working capital means you can pay suppliers and salaries while waiting for customer payments.

Formula

Working Capital = Current Assets − Current Liabilities

Related terms

Cash Flow
The actual money moving in and out of your business. You can be profitable on paper but still run out of cash if money comes in late.

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