Financial Clarity Series | Week 6

Working Capital: Can Your Business Cover What Comes Next?

A business can be profitable and still feel financially stretched.

That's because profit doesn't always mean the business has enough short-term resources available to cover its short-term obligations.

Working capital helps provide that picture.

Simply put:

Current Assets - Current Liabilities = Working Capital

Current assets can include cash, Accounts Receivable, and other resources expected to become cash within a year. Current liabilities can include Accounts Payable, taxes payable, payroll obligations, and other amounts due within a year.

Reviewing your working capital helps you:

✔️ Understand your short-term financial position.

✔️ See whether upcoming obligations may strain cash.

✔️ Identify when too much money is tied up in receivables.

✔️ Plan more confidently for day-to-day operations.

FINANCIAL CLARITY TAKEAWAY

Working capital helps you understand whether the resources available to your business are keeping pace with the obligations coming due.

Question for business owners:

What could strengthen, or strain my working capital over the next 90 days?