Working capital is what the business could turn into cash within a year — cash itself, money owed to you, and stock — minus what it owes within a year.
Positive means the business can fund its own operating. Negative means it is being funded by suppliers, customers' deposits, or a line of credit.
Why it is the number growth breaks first
Growth consumes working capital before it produces any.
A larger job means more materials bought and more labour paid, weeks before the invoice is raised and months before it is paid. Two of those at once, in a business with thin working capital, is how a company with a full order book fails to make payroll.
This is the single most common way a growing small business gets into trouble, and it is invisible on a profit and loss, which will be showing a good month throughout.
What moves it
Getting paid faster raises it without earning anything more — see days to get paid.
Paying suppliers later, where terms allow, does the same in the other direction.
Holding less stock. Every item on a shelf is working capital that is not available.
Deposits. Taking a deposit funds the materials for the job it belongs to, which is why deposits exist in trades that buy up front. It is also why a business that spends deposits on overhead ends up needing the next deposit to fund the last job.
Reading it
The level matters less than the trend and the shape of what is in it. Working capital that is mostly ninety-day receivables is not the same as working capital that is mostly cash, even at the same figure.