"Turnover is vanity, profit is sanity but cash is king".

This saying means that profit is important but having the cash available to meet daily running costs is vital. Working capital is the flow of cash through the business and can be calculated as current assets of the business less current liabilities of the business. Positive working capital means a business is more likely to be able to pay its daily costs. Just because a business is profitable, does not mean it can pay. This unit looks at explaining the working capital cycle as well as how to forecast cash flow and deal with cash flow problems.