The formulas used in the calculations are:
Current Operating Assets=Cash+Accounts Receivable+Inventories
Current Operating Liabilities=Accounts Payable+Accrued Expenses
Net Operating Working Capital (NOWC)=Current Operating Assets−Current Operating Liabilities
This calculator computes the Net Operating Working Capital (NOWC) based on the input values of Cash, Accounts Receivable, Inventories, Accounts Payable, and Accrued Expenses. Net Operating Working Capital represents the difference between a company's current operating assets and current operating liabilities.
Let's assume the following:
Calculate the Current Operating Assets:
Current Operating Assets=1,000+15,000+5,000=21,000
Calculate the Current Operating Liabilities:
Current Operating Liabilities=18,000+2,000=20,000
Calculate the Net Operating Working Capital (NOWC):
Net Operating Working Capital (NOWC)=21,000−20,000=1,000
Therefore, the Net Operating Working Capital (NOWC) is $1,000.