A Guide to Net Working Capital
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What Is Net Working Capital?
Net Working Capital Formula
What Is Included in Net Working Capital
Accounts receivable Cash (or a cash equivalent) Commercial paper Inventory Marketable securities (e.g., U.S. Treasury bills, money market funds) Short-term investments a company intends to sell within one year Treasury bills Short-term notes receivable (e.g., short-term loans to customers or suppliers) Prepaid expenses, such as insurance premiums Advance payments on future purchases Accounts payable Interest payable on loans Any loan principal that must be paid within a year Deferred revenue (e.g., advance payments from customers) Rent Taxes payable Utilities Accounts payable Trade credits Vendor notes Wages Other accrued expenses payable
How Does Net Working Capital Work?
Calculating Net Working Capital
Uses of Net Working Capital
Net Working Capital vs Working Capital
Pros and Cons of Using Net Working Capital
Example of Net Working Capital Calculations
Net Working Capital Schedules
Changes in Net Working Capital
Net Working Capital Ratio
Small Business Loan Tips
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