Current assets minus current liabilities — the short-term liquidity buffer a business uses to fund its day-to-day operations and meet near-term obligations.
Deeper Explanation
Positive working capital means the business can meet its near-term obligations from its own liquid assets without requiring external financing. Negative working capital (current liabilities exceeding current assets) is dangerous for most businesses but actually desirable in some models — retailers like Walmart and Amazon collect cash from customers before paying suppliers, creating "float" that funds operations interest-free. Graham's net current asset value (NCAV) analysis was a conservative version of working capital analysis, using only liquid current assets minus all liabilities as the liquidation floor for a deeply distressed company.
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