5.1.2—Working capital

Working capital is current assets minus current liabilities. It supports day-to-day payment of wages, suppliers and other obligations while inventory and receivables are converted into cash.

Too little can create liquidity pressure; too much can mean cash is tied up inefficiently. Inventory, credit terms and collection speed all affect the cycle.

A wholesaler may show a profit but need extra cash before customers settle invoices; faster collection or better stock control can reduce the gap.

Positive working capital is not automatically healthy, and a single snapshot does not show cash timing or quality of assets.