Technical definition
Current assets minus current liabilities; a broad measure of resources tied to near-term operations.
How it works
Receivables, inventory, prepayments, payables and accruals create timing differences between profit and cash. Changes in operating working capital therefore adjust net income in the indirect cash-flow statement.
Everyday example
If receivables rise by $5,000 without a matching cash collection, operating cash flow is $5,000 lower than otherwise.
Common pitfall
More working capital is not automatically better; excess inventory and overdue receivables can destroy liquidity.