Business, finance and operations
Working capital
Current assets minus current liabilities.
- Business, finance and operations
Definition
Current assets minus current liabilities. It is the short-term money tied up in running the business, mainly stock, money owed by customers and cash, less money owed to suppliers.
For your role
Choose your role to see what this term means in your work.
Why it matters
Too little working capital and bills cannot be paid. Too much and cash is stuck in stock and unpaid invoices instead of being used.
Where it is used
Cash planning, lender discussions and finance reviews. Used by treasury and credit control teams, financial controllers, FP&A and operations managers.
How to calculate it
Working capital = current assets - current liabilities
Trade working capital = inventory + trade receivables - trade payables
Worked example
At 30 September 2025 Raket Parts B.V. had trade receivables of €10,304,850 and trade payables of €3,439,305 (cumulative ledger balances). Trade working capital excluding inventory = €10,304,850 - €3,439,305 = €6,865,545.
The practice data set records no inventory balance, and staff costs are accrued but not paid out in the ledger, so this is a partial view, not full working capital.
Raket Parts B.V. is a fictional company created for Insyt.
Definitions vary. Some analyses use all current assets and liabilities, others only trade items (stock, receivables, payables), and some exclude cash. Check how your organisation calculates it.