Here’s how to calculate net operating working capital: Deduct total current liabilities from your company’s total current assets.
Current assets include:
- Cash and cash equivalents
- Assets that you can easily convert to cash, like accounts receivable
- Assets used in the normal course of business or within one year, like inventory and prepaid expenses
Current liabilities are short-term liabilities due within one operating cycle or one year, such as:
- Notes payable
- Accounts Payable
- Accrued Liabilities
- Unearned Income
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