How To Find Working Capital

Here we discuss about How To Find Working Capital that is very important for knowing the liquidity and running conditions of the business.

It is the difference between Current Assets and Current Liabilities. It is related to daily operations of the business and without knowing the values of this important indicator, the company running performance may be stopped at any time.

The formula for Calculating Working Capital or Net Working Capital Calculation is as follows:

Working Capital  =   Current Assets - Current Liabilities

The difference between Current Assets and Current Liabilities is favorable if current assets are greater than current liabilities as it shows the potential of the company to meet daily expenses of the business. It also indicates that the Liquidity Position of the company is better to meet short-term obligations.

The investors and lenders are interested in the running conditions of the business and this is checked through the calculation of working capital. The more the value favorable, the more the interest the investors and lenders will show in the business of the company.

So it is very important to know How To Find Working Capital and know the strength of the company in meeting short-term obligations.

Working Capital is also known as Net Current Assets in Accounting.