Working capital is a measure of liquidity that gives an indication of the short-term health of the corporate. Working capital is calculated by subtracting present liabilities from present assets. A company’s degree of working capital impacts worth as a outcome of modifications in working capital impacts money flow and valuation is inherently tied to cash move. You might ask, “how does a company change its internet working capital over time? ” There are three major methods the liquidity of the company could be improved year over year. First, the company can decrease its accounts receivable collection time.