Net Working Capital

Net Working Capital is the difference between a company’s current assets and its current liabilities. Net working capital is positive when currents assets exceed current liabilities. Current assets and current liabilities have a life of less than one year. Based on these definitions, the NWC measures the cash that will become available over the next 12 months. A positive NWC is therefore an indication of a healthy company.

{\displaystyle {\text{Working Capital}}={\text{CURRENT ASSETS}}-{\text{CURRENT LIABILITIES}}}

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