Class 12
How do you calculate Net Working Capital?
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Net working capital is calculated by subtracting a business's current liabilities from its current assets. Assets are what a business owns and are liquid, or current, if they can quickly be converted to cash and will be used within one year.
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Net working capital is calculated by subtracting total current liabilities from total current assets. Assets and liabilities are considered current if they are expected to be used or paid within one year. Current assets include all of the liquid assets discussed previously.
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