net working capital

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It´s equal to current assets minus current liabilities. It indicates the amount of resources that a company has to operate once it´s paid all its current liabilities. These resources must be available in the short term, and the company may make them available immediately.

The company also invests in fixed assets (capital expenditure), they can use their funds in net working capital, and this is what is known as change in net working capital. It is the difference between the net working capital of a period with respect to the previous period. In growing companies, it is usually positive.


What is net working capital?

What is net working capital?