Working Capital

The Bigger Picture In Selling Your Business

What Does Working Capital Mean?

Working capital is a company’s available funds for its day-to-day operations. It is current assets minus current liabilities. A company’s working capital is affected and assessed by its cash position, inventory, sales, accounts receivable, accounts payable, short-term debt due, inventory management, debt management, revenue collection, and payments to suppliers.

How much working capital a business has is a measure of its financial health and performance, because it determines its ability to operate on a daily basis. The more working capital a company has, the more it can improve, grow and expand its operations. Vice versa, the less working capital a company has, the less it is able to improve, grow and expand its operations; such a development is a threat to its very existence in the medium to long-term.

Even a profitable company can fail if it does not manage its working capital effectively. Working capital is also variously called net current assets and current capital.

« Back to Glossary Index

Contact the Firmgains Team

Explore the options available to you, improve your chances of successful sale.

Send an Email

    By submitting this form you are agreeing for us to contact you about our services. Note that all data shared with us is private and will not be shared publicly or passed on to third parties without your written consent. View our privacy policy.

    looking to acquire?

    If you’re seeking a business to buy, then we can increase your deal flow.

    Articles & Insights


    head office

    We are based in the Centre of Reading. Two minutes from the train station and just south of the river. You can reach us at the office, by phone or email during working hours from Monday to Friday.
    Click here for directions


    Fourth Floor
    Reading Bridge House
    RG1 8PR

    main phone0333 050 8225