Working capital, also called net working capital, is the difference between a company’s current assets and current liabilities.
Working capital is a measure of a company’s liquidity and short-term financial condition.
A company has negative earnings if its current assets to liabilities ratio is less than one (or if it has more current liabilities than current assets).
Positive working capital indicates that the company is able to finance its current operations and invest in future operations and growth.
Large working capital is not always good. This may indicate that the business has too much inventory, that it is not investing its excess cash, or that it is not taking advantage of favorable credit opportunities.