What it is
Working capital is the difference between current assets (cash, receivables, inventory) and current liabilities (payables, short-term debt).
A positive working-capital balance means the business can cover its near-term obligations with what's already in its short-term coffers.
The full picture
Working capital is also the engine of cash-flow timing. Companies that collect from customers faster than they pay suppliers (negative working-capital cycles) effectively get short-term financing from their suppliers — a key advantage for retailers and large platforms.