Net Working Capital

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Definition: Net Working Capital

Net working capital is defined as the operating liquidity available with the company to finance its day to day operations for developing and growing the business of the company.

The formula used for calculating the net working capital of the company is:

Total current assets – Total current liabilities.

Sometimes the net working capital of the company is negative which shows a poor liquidity condition of the company as it means that the total liabilities exceeds total assets of the company.


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