Net Working Capital
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- เผยแพร่เมื่อ 28 ส.ค. 2014
- This video explains what net working capital is and illustrates how to compute net working capital with an example.
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I love this channel so much. Carried me through Accounting last semester and carrying me through Financial Management this semester. If I get a good job when I graduate, I will be sending some of my income your way as thanks.
Short and simple explanation :)
Great simple explanation
Thank you for this channel. All your vids really help with my studies!
Its super useful . On this pandemic keep it up thank you so much
Thanks !
Is cash included in current assets while calculating nwc?
Hi there, some times I see people calculating NWC excluding cash (from current assets) and short term loans (from current liabilities). Is there any explanation?
That's the difference between WC and NWC, Net means without cash in that regard.
how can i find,which is current assets or which is cl?
great!!!!
Hi. How do you calculate change in net working capital?
You'd have to calculate the net working capital (nwc) for the beginning period and ending period, then take the difference. For example, if you wanted to calculate the change in nwc from 2016 to 2017, you'd have to calculate the 2016 nwc and 2017 nwc, then subtract 2016 nwc from 2017 nwc to get the change in nwc. Good question.
To add to a great answer if you needed percentage change you would do.... (2017 fig. - 2016 fig. / 2016 fig. ) * 100 ..... "fig" is figure/number
the formula I found for net working capital is Current asset over/ current liabilities . why did you subtract?
That is wrong. What you wrote was Current Ratio. It is not Working Capital.
Is it always bad whem WC is negative?
Negative Net Working Capital isn't always a bad thing...here's a good article you can check out: www.thebalance.com/negative-working-capital-on-the-balance-sheet-357287
P
the capital is on the liability side for example Equity and Dept Capital. Why do not we substract them also?
This is the same question that I have.
Equity is our own funds. We are subtracting Debt, but only the short term debt, i.e. Current Liabilities
Thank you so much!! (from Taiwan) :)
What if the total assets and total liabilities is also given? Can I just disregard them?
Total Assets already include Current Assets, same for Total Liabilities. Current is part of Total.
Why is long term debt not included? Is it not a liability too?
It's not a CURRENT liability (short-term).
maybe "working" is meant to imply short term nature of this NWC measurement?
not current (long term)
i thought you are suppose to not include cash?
Why is PPE not counted as a current asset?
Slainiae Current assets are assets which are considered to be relatively easy to convert to cash within a year or less. PP&E typically do not have this level of liquidity, and are therefore considered long-term assets.
it is not as liquid as other current assets.
What if working capital has a negative amount??
The firm is in trouble. It's current obligations (bills) are exceeding what the firm has at hand to pay them
What I meant to say was: Current assets (minus cash) - Current liabilities (minus interest bearing liabilities) = Net working capital
I know that the formula can be calculated this way
Current Assets (less cash) - Current Liabilities (less debt) = NWC
When I'm calculating it with this formula ... shouldn't my calculations be, when I'm using the terms on the balance sheet of a company,
Total current assets - (cash) - Total current liabilities - (accounts payable) = NWC
Current Liability is short term debts. If you subtract debt from it, you make it zero.
@@gbmacbook4364 What I meant to say was: Current assets (minus cash) - Current liabilities (minus interest bearing liabilities) = Net working capital
Thanks !