Net Working Capital, usually abbreviation NWC is used. It is a term that refers to current assets after deduction current liabilities.
Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = WC - Current Liabilities = (inventory + recievables + financial assets) - Current Liabilities
Use of the NWC indicator in practice: the indicator is used by the enterprise management, for example for working capital management.Financial manager manages individual components of working captil, defines its optimum level due to the volume and nature of sales, it pursues the recoverability of recievables and evaluates its individual components. The financial manager can not from his position affect the individual items of working capital. His role is to encourage others to seek better solutions.
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