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Total Current Assets-Total Current Liabilities=Working Capital Gap
What if i say
Working capital gap = aggregate of current assets – interest free credit
Net Working Capital = working capital gap – short-term borrowings
Awesome answer Mr. Jetley. Thank you.
Total Current Assets - Total Current Liabilities = Working Capital Gap
Measures the working capital the company's ability to meet its obligations on short-term and long-term also explains its strategy in the operation and employ its investments and funds of its shareholders through the statement of the difference between current assets traded for a statement net working capital and general and liabilities whenever the company's assets traded largest of its obligations traded whenever they ability to repay its obligations largest affected net working capital positively or negatively according to the investment policy of the Company Is its strategic offensive any require high risk in investment by an increase in borrowing either follow a balanced strategy for medium risk so that a balance between the requirements of traded assets traded or conservative risk low Vtjd has a large surplus in liquidity and net capital is a positive factor at high rates and its impact on the trade-off between risk and return and profitability.
Working capital is the difference between current assets (short-term) traded and liabilities (short-term), and analysts look at the working capital as an indicator of the effectiveness of the facility in liquidity and operations management, if less working capital rate on the facility's ability to meet short-term obligations may I said, and thus increased its financial risk level. If working capital significantly increased rate on the facility is effective in the management of its operations (either that sales have said, or they do not get their debts, or they accumulate inventory
Its nothing but...Total Current Assets-Total Current Liabilities...Total Current Assets-Total Current Liabilities=WorkingCapital Gap
The amount required by the business for the day to day operation that form part of the difference between total current assets and total current liabilities.
