Working Capital

Asset symbol is not found or was delisted

We are unable to locate this entity at this time. If you believe the symbol you are trying to look up is valid, please let us know, and we will check it out. Check all delisted instruments across multiple markets.

Indicator Description

Working Capital can be positive or negative, depending on how much of current debt the company is carrying on its balance sheet. In general terms, companies that have a lot of working capital will experience more growth in the near future since they can expand and improve their operations using existing resources. On the other hand, companies with small or negative working capital may lack the funds necessary for growth or future operation. Working Capital also shows if the company has sufficient liquid resources to satisfy short-term liabilities and operational expenses.

Working Capital

 = 

Current Assets

-

Current Liabilities

Working Capital is a measure of company efficiency and operating liquidity. The working capital is usually calculated by subtracting Current Liabilities from Current Assets. It is an important indicator of the firm ability to continue its normal operations without additional debt obligations. .

Working Capital In A Nutshell

Typically you want to see a company have a higher working capital number because that means the liabilities are not weighing the company down as much as it could. There are many avenues you can take this particular number and equations, so let us pick it apart and find what you may want to be looking for.

Working capital is the current assets minus the current liabilities, and this number can be both positive or negative depending on the numbers populated in the equations. It is important to understand what goes into these types of formulas because you can then begin to pick it apart and pinpoint what causes the final number and that can potentially unearth different issues with a company.

Closer Look at Working Capital

First are current assets and an asset is anything the company is using to generate revenue or house the business. Assets are the same across some industries, but typically they differ from company to company. A manufacturing firm will have different assets compared to a start up in Silicon Valley. When researching the assets, you want to know if they are in good working order and could potentially be liquidated in the event of a bankruptcy or financial distress.

Second are current liabilities and this encompasses the debt in a company, both long term and short term. If you look at debt, you want to understand why the debt is there in the first place. A reason could be the company is growing a needed the funds to purchase more assets and that is an acceptable answer. What you do not want is the company getting loans to pay off existing debt holders because that can signal a cash flow problem, which could ultimately bring down the business.

Bringing it all together, you want the working capital number to be as large as possible really, because that indicates there is little to no debt on the books and cash flow should not be an issue. However, it may be uncommon to find a business with no debt as many large companies have it for several of reasons. Be sure to fully understand the company’s intent and then move forward from there. If you get stuck, reach out to an investing and trading community as they can give you ideas on how to implement these numbers and gear it towards your current setup. If all else fails, reach out to an investing professional and they should be able to help you out. Working capital will be in almost all financial reports and should be in your toolbox.

Other Suggestions

E Eni SpA ADRCompany
EFSCP Enterprise Financial ServicesCompany
EAD Allspring Income OpportunitiesFund
EU EnCore Energy CorpETF
EVZ CBOE Euro CurrencyIndex
EM EMCryptocurrency
ESUSD E Mini SP 500Commodity

Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.

Use Investing Themes to Complement your positions

You can quickly originate your optimal portfoio using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

Did You Try This Idea?

Run High Yield ETFs Thematic Idea Now

High Yield ETFs
High Yield ETFs Theme
ETF themes focus on helping investors to gain exposure to a broad range of assets, diversify, and lower overall costs. The High Yield ETFs theme has 95 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can partner with us for reliable portfolio optimization as you plan to utilize High Yield ETFs Theme or any other thematic opportunities.
View All  Next Launch
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

Other Complementary Tools

Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm