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Working capital (also known as net working capital) is a financial metric which represents the amount of day-by-day operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. A company can be endowed with assets and profitability, but short of liquidity, if these assets cannot readily be converted into cash.

When current assets are less than current liabilities, an entity has a working capital deficiency also called a working capital deficit.

The current portion of debt (payable within 12 months) is critical, because it represents a short-term claim to current assets and is often secured by long term assets. Common types of short-term debt are bank loans and lines of credit.

An increase in working capital indicates that the business has either increased current assets (that is received cash, or other current assets) or has decreased current liabilities, for example has paid off some short-term creditors.

Working Capital Management Subcategories Working Capital Management Articles Cash Advance - The cash genie for your business! by Wain Roy Mar 11, 2008 Let’s think of a typical situation. You have a business and you’re passing through a not-so-good phase. You could really do with some emergency funding. Oh, if you only had a genie who could grant you just one wish, you know hat to ask for! Relax, th... Working Capital - A Tool To Judge Your Company's Efficiency by Sam D'Costa Feb 21, 2008 The most repeated maxim amongst financial managers is "Cash is the lifeblood of business". A business owner always look that his cash flow to business is smooth and use it for generating profit. When a business is running smoothly and taking in profi... Manage Working Capital with Cash Advance by Alfred Anderson Jan 29, 2008 The success of an organization depends on how effectively its working capital is managed. Day to day operational expenses pertaining to advertising, salaries, rent etc. needs to be met on a regular basis and thus proper management of working capital ... Business Owners Tend to Underestimate The Importance of Working Capital! by Wardell Brooks Jan 22, 2008 Many business owners tend to underestimate the importance of working capital financing. Many tend to see this as simply an “emergency fund”, an insurance plan that will probably have little use. But the applications for working capital go far beyond ... Working Capital Financing - Easiest To Get, Best To Repay by Ronn Jones Dec 28, 2007 Any business, big or small, requires a continuous hoard of organized finance in order to keep functioning and grow in future. Risks and speculations are integral parts of any business and successful entrepreneurs often require funds to back up their ... Working Capital: The Life Blood of Business by Suzanne Macguire Dec 21, 2007 Successful business thrives on smooth cash flow. This is no jargon but a simple truth oft repeated and realized by the financial managers around. The top priority of any small business is to stay solvent and ensure the availability of adequate workin... Business Financing With Cash Advance by Alfred Anderson Nov 30, 2007 The most critical decision for any small business is to find the right source of financing. The market offers a host of financing solutions, enough to confuse an entrepreneur. The nature of business funding depends on the nature of business and thus ... Book Review: The Brainwashing of the American Investor by Steve Selengut Nov 28, 2007 As I write this (11-27-2007), the markets are getting ready to open after closing down the previous day. The Dow Jones industrial average has fallen nearly 240 points and the headline in the local paper is screaming "Wall Street suffers another big h... Wall Street Conventional Wisdom and Stock Market Corrections by Steve Selengut Nov 08, 2007 During every correction, I encourage investors to avoid the destructive inertia that results from trying to determine: how low can we go; how long will this last? Investors who add to their portfolios during downturns invariably experience higher Mar... Working Capital Loan - Money Power to Propel your Business! by Simon Churchgate Oct 08, 2007 A business needs a constant supply of ready cash in order to keep on functioning. It also needs funds to grow and expand. A working capital loan is the ideal solution. Whether you are looking to purchase new equipment for your business, or planning t...