Working Capital

Definition

The short-term financial cushion: current assets (cash, receivables, prepaid) minus current liabilities (AP, accruals, short-term deferred revenue).

Formula

Working capital = Current assets - Current liabilities

Worked Example

Cash $600,000 + Receivables $45,000 + Prepaid $12,000 = $657,000
AP $12,000 + Accrued $8,200 + Deferred revenue $40,000 = $60,200

Working capital = $657,000 - $60,200 = $596,800

Interpretation & Pitfalls

Note the SaaS quirk: deferred revenue is a liability, so heavy annual prepay can make working capital look small while cash is actually strong. Read the components, not just the net.

In TupicFinance

All components — cash, AP, accruals, deferred revenue — are tracked objects, so working capital is assembled from live data.