---
title: "What Is Working capital? Dental Practice Glossary"
description: "Working capital is the cash and near-cash a practice has available to pay its short-term bills, found by subtracting current liabilities from current assets."
url: https://joncopeland.multisites.ai/glossary/working-capital
publisher: Copeland Consulting Services
email: drcopeland@joncopelanddds.com
contact: https://joncopeland.multisites.ai/contact
---

Finance and valuation

# Working capital

Working capital is the cash and near-cash a practice has available to pay its short-term bills, found by subtracting current liabilities from current assets.

The IRS Internal Revenue Manual defines working capital as current assets minus current liabilities and says it is the liquidity of a business that is used in its day-to-day operations. The SBA's glossary gives a similar meaning: the amount of current assets left after all current debts are paid. Current assets include cash and [accounts receivable](https://joncopeland.multisites.ai/glossary/accounts-receivable). Working capital shows whether a practice can cover payroll, rent and supplier bills while it waits for payments. A new or growing practice often needs more of it, which is one reason lenders ask about it in a [practice loan](https://joncopeland.multisites.ai/glossary/practice-loan). See [cash flow](https://joncopeland.multisites.ai/glossary/cash-flow).

[Next stepPractice consulting with Dr. Copeland](https://joncopeland.multisites.ai/contact?topic=consulting)

## Related terms

-   [Cash flow](https://joncopeland.multisites.ai/glossary/cash-flow)
-   [Accounts receivable](https://joncopeland.multisites.ai/glossary/accounts-receivable)
-   [Practice loan](https://joncopeland.multisites.ai/glossary/practice-loan)
-   [Balance sheet](https://joncopeland.multisites.ai/glossary/balance-sheet)

## Sources

1.  [IRS, Internal Revenue Manual 4.10.13 Certain Technical Issues](https://www.irs.gov/irm/part4/irm_04-010-013)
2.  [IRS, Internal Revenue Manual 4.10.13 Certain Technical Issues](https://www.irs.gov/irm/part4/irm_04-010-013)

## Talk with Dr. Copeland

[Contact Dr. Copeland](https://joncopeland.multisites.ai/contact)[Email](mailto:drcopeland@joncopelanddds.com)