# Working Capital

Nov 14, 2024

< 1min read

Working capital is the difference between a company’s current [assets](/content/glossary/asset/index.html) and current [liabilities](/content/glossary/liabilities/index.html), 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](/content/site-root.html), assessing a borrower’s working capital helps lenders gauge their ability to manage [cash flow](/content/glossary/cash-flow/index.html), repay loans, and sustain operations without relying on external financing.