Working capital is the liquidity (or cash) available to fulfill daily obligations. It can be calculated by:[i]
● Current assets – current liabilities OR
● Accounts receivable + inventory – accounts payable
This shows you if you can pay your debts, accounts payable, or other obligations that are due within a year.
[i] Investopedia. Investopedia, n.d. https://www.investopedia.com/