Working Capital
Definition
Current assets minus current liabilities — the capital available for day-to-day operations.
Explanation
Positive working capital means the company can cover its short-term obligations. Negative working capital can signal liquidity risk, though some business models (like Amazon) intentionally operate with negative working capital by collecting from customers before paying suppliers. The working capital cycle (days sales outstanding + days inventory outstanding - days payable outstanding) measures how efficiently a company manages its operating cash needs. A shortening working capital cycle is bullish; lengthening is a concern.
Formula
Working Capital = Current Assets - Current Liabilities
How Stoquity Uses This
Stoquity incorporates working capital analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.