Final answer:
Working capital measures a company's ability to meet its short-term financial obligations. The formula for working capital is: Working Capital = Current Assets - Current Liabilities. For example, if a company has $100,000 in current assets and $50,000 in current liabilities, its working capital would be $50,000.
Step-by-step explanation:
Working capital measures a company's ability to meet its short-term financial obligations. It is calculated by subtracting current liabilities from current assets. The formula for working capital is:
Working Capital = Current Assets - Current Liabilities
For example, if a company has $100,000 in current assets and $50,000 in current liabilities, its working capital would be $50,000.