Net Working Capital Template

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Net Working Capital Template

This net working capital template allows you to compute the net working capital using the formula:

Net Working Capital = Current Assets (less cash) – Current Liabilities (less debt)

Below is a preview of the net working capital template:

Net Working Capital Template Screenshot

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Net Working Capital (NWC) is the difference between a company’s current assets (net of cash) and current liabilities (net of debt) on its balance sheet. It is the measure of a company’s liquidity and its ability to meet short-term obligations, as well as fund operations of the business. The ideal position is to have more current assets than current liabilities, and thus have a positive net working capital balance.

There are a few different methods for calculating net working capital, depending on what an analyst wants to include or exclude from the value.

Formula:

Net Working Capital = Current Assets (less cash) – Current Liabilities (less debt)

or

NWC = Accounts Receivable + Inventory – Accounts Payable

The first formula above is the broadest (as it includes all accounts) and the second formula is the most narrow (as it only includes three accounts).

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Additional Questions & Answers

CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.

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