Net working capital is a crucial metric for assessing the short-term financial health and operational efficiency of a company. It encompasses current assets like cash, inventory, and accounts receivable, which represent the funds and resources readily available for business operations.
It is a measure of both the operational efficiency of a company and its financial health in the short term, based on these calculations it is possible to know if they are fine or if they are going bankrupt
net working capital
current assets
Sundry Debitors
They are the customers of a company who rarely make purchases on credit and the amounts are not significant.
Inventory
represents raw materials, components and finished products
accounts receivable
Any money owed by the customer for goods or services purchased on credit.
notes receivable
which entitles the holder to receive a certain sum of money from the drawer under the terms specified therein.
Cash
The assets in a more liquid way, physical money used to manage operations.
current liabilities
Bank Loans
is an arrangement in which a bank gives money that must be paid back with some interest
Tax Payable
are the liability accounts that contain the balance of taxes owed to the government
Wages Payable
are the wages that workers earned but have not yet been paid
Sundry Creditors
These are customers to whom the company owes funds, the company has purchased goods on credit, and payments have not yet been made.
Accounts Payable
Refers to a company's payables for products or services provided by a third party, such as a supplier.
notes payable
contains the promise of the drawer to pay a certain sum of money to the drawee, or to the holder of the note, on demand or on a certain date, this payment will require the drawer to pay the amount with interest
