What is working capital?

In a company simulation game, you can often find a variety of terms that need clarification. One of the main concepts in the analysis of the economic activity of an enterprise is working capital. This indicator illustrates the company’s ability to independently carry out current production processes. It is also used in fundamental analysis of securities, helping to assess the effectiveness and profitability of the issuer’s activities.

Definition of working capital in best economic games 

From the point of view of economics and business simulations, working capital is a set of assets that transfer their value to finished products immediately, in one cycle, and not gradually, like fixed assets (buildings, equipment). Thus, working capital is similar to working assets. However in the practice of financial analysis, working capital means the difference between the amounts of current assets and current liabilities. Instead of the concept of current assets, the term “working capital” is often used. When analyzing working capital, they are synonymous.