Description: Net Working Capital (NWC) is a fundamental financial metric that represents the difference between a company’s current assets and current liabilities. This indicator is crucial for assessing the liquidity and operational efficiency of an organization, as it reflects the company’s ability to meet its short-term obligations with its most liquid assets. A positive NWC indicates that the company has sufficient resources to fund its daily operations and handle unforeseen events, while a negative NWC may signal liquidity problems that could affect its functioning. Current assets include items such as cash, accounts receivable, and inventories, while current liabilities encompass debts and obligations that must be paid in the short term. Proper management of net working capital is essential to maintain financial stability and ensure sustainable growth for the company. Additionally, NWC can influence strategic decisions, such as investing in new projects or expanding the business, as it provides a clear view of the organization’s short-term financial health.
