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Working Capital

The following provides a definition and meaning for the term Working Capital:

Definition - the strict definition

The capital of a business that is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

Meaning - how it relates to pharmacy sales

In real terms, Working Capital refers to the cash available to an enterprise for day-to-day operations. It's the money that's available to pay expenses and purchase stock after accounting for debts that are due to be paid in the short-term.

If a business does not have enough money in the bank, it is at risk of business failure. Ensuring that the business has good Working Capital will increase the chances of success in the business.

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