Working capital is a measure of a company's liquidity, or its ability to pay its short-term liabilities and finance its day-to-day operations. It is calculated by subtracting current liabilities from current assets. Some examples of current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable, short-term debt, and taxes payable. A company with a positive working capital has more current assets than current liabilities, which indicates that it has enough liquid assets to cover its short-term obligations and continue operating. On the other hand, a negative working capital indicates that a company may be in financial distress and may struggle to meet its short-term obligations. In short, working capital is a crucial metric for assessing a company's financial health and ability to meet its obligations.