 Working capital measures the ability to pay current liabilities with current assets. In general, the larger the working capital, the better the ability to pay debts. Working capital is a measure of liquidity. Working capital is calculated as current assets minus current liabilities. It's basically just the amount of current assets a company has more than its current liabilities. Here is the current asset and liability section of a sample company's balance sheet. We'll use the highlighted current asset and liabilities to determine working capital. For 2015, current assets minus current liabilities gives us working capital of $2,700. For 2016, current assets minus current liabilities gives us working capital of $11,250, which is a substantial increase.