Working Capital
The money tied up in day-to-day operations: current assets like receivables and inventory minus current liabilities like payables. It funds the gap between paying costs and collecting revenue.
Working capital = current assets - current liabilities
Why it matters
Working capital can quietly starve a growing company of cash, especially in inventory or services businesses where you pay before you get paid. Managing it well can matter as much as growing revenue.
For example
A hardware startup pays suppliers upfront but collects from retailers 90 days later, tying up 50 lakh of working capital just to keep operating.
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Also in Starting Up
See how founders actually handle this on Money, pricing and metrics, part of the Starting Up hub.
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