Working Capital
Also called: net working capital
What is Working Capital?
Working capital is current assets minus current liabilities: the short-term resources available to run day-to-day operations after near-term obligations are met. Most of it sits in stock and receivables.
Why Working Capital matters
Working capital is where growth consumes cash. Doubling sales usually means doubling stock and receivables first, which is why fast-growing businesses so often feel poorer than they are.
Working Capital formula
Working capital = Current assets − Current liabilities
Cash conversion cycle = DSO + days of stock − DPO.
How Working Capital works in practice
Manage the three levers directly: hold less stock, collect faster, and use supplier terms fully. Each frees cash without borrowing a rupee.
Frequently asked questions
Enough to cover the gap between paying suppliers and collecting from customers — which the cash conversion cycle measures.