# Working capital

> Working capital is current assets minus current liabilities: the cash a business needs to operate. Its change explains the gap between profit and cash.

Updated: 2026-09-03 · Author: Santiago Viglione (Fibady) · https://www.fibady.com/en/glossary/working-capital

Working capital is current assets minus current liabilities. It represents the cash a business needs tied up to operate day to day, and its change explains the difference between profit and cash in a period.

## How it is calculated

Working capital = Current assets − Current liabilities. In management analysis the operating version is used: Receivables + Inventory − Payables, excluding cash and financial debt. It is also called net working capital.

## Example with numbers

Current assets 1,100,000 (cash 300,000, receivables 600,000, inventory 200,000). Current liabilities 500,000 (payables 300,000, short-term debt 200,000). Working capital: 600,000. Operating working capital, excluding cash and debt: 600,000 + 200,000 − 300,000 = 500,000.

## How Fibady does it

The consolidated balance sheet is recalculated with every ERP sync, and working capital appears as a subtotal in the unlimited-level P&L and balance sheet, in each entity's currency and in the group's. Its change flows into the indirect cash flow without intermediate spreadsheets.

## Frequently asked questions

### Is working capital the same as net working capital?

Yes, in everyday use. Net working capital is the more precise name for the same calculation; see the dedicated entry for the operating version.

### Is negative working capital bad?

It depends on the model. A supermarket or a SaaS that bills upfront runs on negative working capital because customers finance the activity.

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