Working capital
From ACT Wiki
Working capital is normally defined as the excess of current assets over current liabilities.
It represents the day to day capital requirement to continue the operations of the organisation.
In very simple terms, it can be calculated as:
Stock
ADD: Trade debtors
LESS: (Trade creditors)
= Working capital
This working capital requirement has to be financed by borrowings, shareholders' funds, or a combination of both of them.
Working capital can be negative, for example in food retailing.
