The net working capital measurement estimates your company's short-term liquidity situation. You calculate your net working capital by subtracting your current liabilities from your current assets.

Interpreting Net Working Capital Net working capital is positive if current assets exceed current liabilities. This means a company has sufficient money to pay its short-term financial obligations.

Net working capital (“NWC”) is often a highly scrutinized component in M&A deals and can significantly impact the purchase price. NWC represents the liquidity a company needs to run its day-to-day ...

Discover why it is important to include changes to net working capital as a component in calculating the net present value (NPV) of a company.

Net working capital measures the short-term liquidity of a company. CAPEX, on the other hand, is a long-term investment in the future of a company.