Smart Supports from the Net Working Capital Now

Working capital is the difference between current assets and current (short-term) liabilities of an enterprise or organization. The amount of working capital reflects the amount of funds that the enterprise owns in current assets and is an important characteristic of financial sustainability. Let us know what is net working capital and more.


The program analyzes working capital in the Business Analysis section.

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  • Working capital formula
  • Working capital = Current assets – Current liabilities

Working capital is formed from:

  • stocks of raw materials and materials ,
  • work in progress ,
  • low-value and wearing items ,
  • finished products ,
  • accounts receivable .

Their total value determines the amount of money needed to cover them. If the current assets are less than current liabilities, then the working capital will be negative.

The amount of working capital of an enterprise, organization depends on:

  • the amount of costs for the acquisition of raw materials and direct overhead costs in the production of goods that are easy to sell;
  • the duration of the production cycle and the sale of products;
  • the cost of indirect overhead costs in the production and sale of products,
  • the volume of the loan received and the period of its return.

Working capital in the balance sheet is the 2 section of the asset balance.

Components of working capital satisfy the liquidity criterion. Liquidity allows you to quickly turn the enterprise’s funds into cash and finance permanent operations.

To measure the efficiency of using working capital, use the indicator of profitability of working capital . The indicator is calculated by dividing the net profit from the sale of products or another financial result by the amount of working capital.

To assess the efficiency of working capital in business practice, the turnover ratio (turnover) and the turnover period are used.

Still found about working capital

On the relationship and algorithms for calculating the indicators of its own working capital and net working capital,

The difficulties in determining the amount of own working capital are due to the fact that both equity and borrowed funds can be invested both in off- balance assets and in

Development of the methodology for the economic analysis of working capital by

The complex of indicators of the economic activity of an enterpriseincludes indicators of direct or indirect factor of time the period of repayment of accounts receivable and payable period of the operational and financial cycle period of recoupment of capital financial leverage

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