A company’s working capital refers to the funds it has to meet current liabilities. The working capital ratio is current assets divided by current liabilities. Net working capital is measured by deducting current liabilities from current assets. Current assets are made up of the money a company has in the bank, its accounts receivable (i.e. due from clients) and inventory that will be converted to cash within a year. Current liabilities are accounts payable (i.e. due to suppliers and other vendors) and short-term debt facilities (falling due in less than a year).