Working capital is the money that allows a corporation to function by providing cash to pay the bills and keep operations humming.
One way to evaluate working capital is the extent to which current assets, which can be readily turned into cash, exceed current liabilities, which must be paid within one year.
Some working capital is provided by earnings, but corporations can also get infusions of working capital by borrowing money, issuing bonds, and selling stock.
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- Incorporation, Leveraged buyout, STRIPS, Treasuries
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