Working Capital Management

Why does working capital (current assets – current liabilities) matter? Because it helps show us how much money we have over the next year to improve our business.

As a refresher, current asset accounts typically consist of cash, marketable securities, inventory, and prepaid expenses. Current liability accounts typically consist of accounts payable and other accruals.

In this section, we’re going to examine how to best manage our working capital by focusing on the most important accounts that make up working capital.