Difference Between Current Assets And Net Current Assets

Current Assets VS Working Capital

Current Assets are the resources which provide probable future economic benefits to business in the current accounting period which are either equal to one year or less than one year while the Net Current Assets or Working Capital is the Difference Between Current Assets And Current Liabilities i.e., Current Assets - Current Liabilities.

Current Assets are calculated by applying the following formula:

Current Assets = Working Capital + Current Liabilities

The formula used to calculate net current asset is shown below:

Net Current Assets = Current Assets - Current Liabilities

Positive Net Current Assets (Current Assets are more than Current Liabilities) tell us that the company is able to meet current obligations in order to run the business operations while current assets show you the probable future economic resources which will be available in the current accounting period.

Negative Net Current Assets (Current Assets are less than Current Liabilities) show that the company is not in a position to meet its current liabilities / current obligations to carry on its daily working operations which is a threat to the company’s business because it will need sufficient current resources to meet its current obligations while less current assets show that the company has less current resources in current accounting period.