Definition of Working Capital

Working capital is a measure of a corporation’s liquidity that is found by subtracting current liabilities from current assets.

Applying "Working Capital" to Securities Exams:

Fundamental analysts will want to review a number of items relating the a company’s financial health. A company’s ability to meet is current financial obligations can be measured in a number ways. Looking at the company’s working capital will show the company’s ability to meet its obligations coming due in 12 months or less.

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