ProcessIntroductory

What is the formula for calculating net working capital as mentioned in the chapter?

Name: Financial Management: Principles and Applications
Author: Sheridan Titman
ISBN: 9780134417219

The formula for calculating net working capital is: Net Working Capital = Current Assets - Current Liabilities.

Key points

Net Working Capital measures a firm's short-term financial health.
It is calculated by subtracting current liabilities from current assets.
Current assets are expected to be converted to cash within one year, while current liabilities are debts due within the same period.

Source:Financial Management: Principles and Applications· The Time Value of Money—The Basics· p. 105–125

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