Why is net working capital important?

Checking your net working capital helps you assess your business's short-term liquidity. Plus, you can also use NWC to understand your company’s ability to use assets efficiently. You should aim for more current assets than liabilities for a positive net working capital balance.

Who is network Capital?

Network Capital is a Fintech (Financial technology) direct mortgage lender and servicer headquartered in Miami, FL. We are a leader in the mortgage industry for more than 20 years. In 2019, Network Capital was voted as one of Fortune Magazine’s “Best Places to Work” because of our passion for employee development and advancement.

How do you calculate working capital?

You calculate your current assets at $60,000 and your current liabilities at $65,750. So, your net working capital is ($65,750 - $60,000) = -$5,750. Despite having your best year in sales, you still don’t have enough assets to offset your operating costs and liabilities.

What is a positive net working capital balance?

Ideally, the net working capital balance is positive, meaning that the company has more assets than liabilities. A look at a company's net working capital can be used as a preliminary measure of the company's ability to utilize assets efficiently.