definition: Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital.
WC=WTF?
Normally when a definition is this obtuse, we glaze over it right? Well, if you want to run a business, even a tiny one, you must learn this word. It has nothing to do with making money, and everything to do with having money. Here’s my attempt at a definition:
Money in the bank to cover debts due to be paid within a month.
If you don’t have this, you die. Debt is paying your salaries on time. Debt is paying suppliers on their terms. To get your working capital, you might have to take a long-term loan, like a line of credit or a loan that’s due months or years from the time you get the money. It’s called working capital in the way that this is your day to day float of money “capital” to get your work done.
Making sure to have a stash of cash, even if you have to pay interest for the privilege
WC=WTF?
Normally when a definition is this obtuse, we glaze over it right? Well, if you want to run a business, even a tiny one, you must learn this word. It has nothing to do with making money, and everything to do with having money. Here’s my attempt at a definition:
Money in the bank to cover debts due to be paid within a month.
If you don’t have this, you die. Debt is paying your salaries on time. Debt is paying suppliers on their terms. To get your working capital, you might have to take a long-term loan, like a line of credit or a loan that’s due months or years from the time you get the money. It’s called working capital in the way that this is your day to day float of money “capital” to get your work done.
Making sure to have a stash of cash, even if you have to pay interest for the privilege
RSS Feed