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What is Non-Cash Working Capital
Non-cash Working Capital is a term that refers to the sum of inventory and receivables.

Non-Cash Working Capital, usually the abbreviation NCWC is used. It is a term that refers to the sum of inventory and receivables.


NCWC = Inventory + receivables

Non-cash working capital

What is the indicator of non-financial working capital in practice for?

Inherently non-working capital has low liquidity because inventories and receivables can be difficult to sell. As an indicator is used in the working capital management, especially its ratio in the overall working capital amount. Financial manager controls the individual components of working capital, defines its optimum level given the volume and nature of sales, watches due-dates and recoverability. Generally, the lower the volume of non-financial working capital is the effective management of current assets is - less inventory, less accounts receivable (shorter due-date).

Indicator of nonfinancial working capital, however, is not one of frequently used indicators.

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Last update: 04.11.2016


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