Working Capital

Working capital is the difference between a company’s current assets and current liabilities, representing the funds available to meet short-term financial obligations and support day-to-day operations. It is a key indicator of a business’ financial health and liquidity. Positive working capital ensures that a company can cover its operating expenses and invest in growth opportunities. 

In loan management, assessing a borrower’s working capital helps lenders gauge their ability to manage cash flow, repay loans, and sustain operations without relying on external financing.