Hey, totally get where you’re coming from. I run a local bakery, and for the longest time, I thought having some cash in the bank meant I was financially stable. But turns out I was missing the bigger picture. When I finally sat down to calculate the working capital formula (current assets minus current liabilities), it hit me—I had way more tied up in unpaid invoices and inventory than I thought. That realization helped me renegotiate payment terms with a few vendors and tighten up my stock levels.
It’s not just a financial formula—it’s a reality check. If your working capital is too low, you’re basically risking your ability to cover short-term costs. I actually found a great breakdown here that explained it better than most textbooks ever did:
working capital formulaGive it a read if you're trying to make sense of it in simple terms. It’s helped me spot warning signs way earlier and plan purchases with more confidence.