No, net working capital is not a current asset. A current asset is any asset that will provide an economic value for or within one year. Net working capital refers to the difference between a company’s total current assets minus its total current liabilities. Therefore, net working capital is not itself a current asset, but a representation of the value of the difference.
Is Net Working Capital a Current Asset? FAQs
No, net working capital is not a current asset.
A current asset is any asset that will provide an economic value for or within one year.
Net working capital refers to the difference between a company’s total current assets minus its total current liabilities.
Net working capital refers to the difference between a company’s total current assets minus its total current liabilities. Therefore, net working capital is not itself a current asset, but a representation of the value of the difference.
Current Assets are used to calculate NWC by subtracting current liabilities from total assets on a balance sheet or income statement. This calculation helps investors assess the ability of a company to finance its operations and pay off debt obligations shortly.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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