What is the term for the excess of current assets over current liabilities?

The term for the excess of current assets over current liabilities is working capital.

The basic formula is current assets minus current liabilities. Current assets commonly include cash, accounts receivable, inventory and short-term investments; current liabilities include accounts payable, accrued expenses and debt due soon. The result is often called net working capital.

Working capital helps show whether a business can fund routine operations and meet near-term obligations. Positive working capital generally indicates a liquidity cushion, while negative working capital means short-term liabilities exceed current assets. However, negative working capital is not automatically a crisis: retailers and subscription businesses may collect cash before they must pay suppliers or deliver services.

A common mix-up is gross working capital, which means the total of current assets without subtracting liabilities. Working capital also differs from the current ratio, which divides current assets by current liabilities rather than subtracting them. Analysts often study the cash conversion cycle alongside working capital to see how quickly inventory and receivables become cash.