In plain English
It is the buffer between what you can turn into cash soon and what you owe soon. In resale, most of it is tied up in inventory.
More working capital means you can buy the next load on your terms instead of at the moment you are most desperate.
Example
$14,000 cash + $62,000 inventory = $76,000 current assets, minus $31,000 payables = $45,000 working capital.
Why it matters
Buying power, supplier terms and survival through a slow quarter all come from here.
COMMON MISTAKECounting slow-moving inventory as if it were cash.