How to collect accounts receivable
Working Capital Analysis
Working Capital from Real Estate
Quick Ratio Analysis
Current Ratio Analysis
What is Working Capital?
Formula: Current Assets - Current Liabilities = Working Capital
Working Capital is the difference between Current Assets
versus Current Liabilities
. (Current Assets are those assets that will be turned into cash within one year. Current Liabilities are those liabilities due within one year) This calculation represents the liquidity that a company has to meet its obligations coming due in the next 12 months. Though the amount should be positive, in times of distress it can be a negative amount.
Often as a management tool it is useful to track the change in working capital on a weekly basis. A company that is generating profits is usually increasing their working capital. Conversely, declining profits often consume working capital. See Flash Report