Question

WHat is the formula to find net working capital if it is not given? What information do I require?

Answer 1

I will share three types of formula which are just expansion of each other it would give net working capital:

1.

Net working capital = Current Assets - Current Liabilities

(general)

2.

Net working capital = Current Assets – Current Liabilities

Current assets = Debtors + Account receivable + Stocks + Cash

Current assets = Creditors + Account payable + Accrued liabilities

(general)

3.

Net working capital = Total non-current assets – Equity - Reserves & surplus - Long term debt

This formula applies when we don’t have numbers for current assets or current liabilities or both