Working capital is the amount of cash and other current assets within a business and that are available after its current liabilities are accounted for. Understanding how much working capital you have on hand to pay bills as they come due is critical to the success of an organization. Working capital, also known as net working capital (NWC), is the difference between a company's current assetssuch as cash, accounts receivable/customers' unpaid bills, and inventories of raw materials and finished goodsand its current liabilities, such as accounts payable and debts. The less working capital you have, the greater risk you run of having a cash flow crunch in which you struggle to buy new inventory or pay a bill. Too much working capital can hurt a company's finances, too. Working capital does need to be invested to encourage growth, but companies should be picky and evaluate all investments with strategies discussed in previous chapters. An alternative way a business can use free cash flow is to invest in growing the business, paying down debt or when paying dividends to owners and shareholders. Free cash flow can be used to expand operations, bring on additional employees or invest in additional assets, and