Net Working Capital

Net Working Capital (NWC) is a financial measure that shows a company's short-term liquidity and efficiency. It’s calculated by subtracting current liabilities (what the company owes soon) from current assets (what it owns that can be quickly converted to cash). A positive NWC indicates the company has enough resources to cover its short-term obligations, supporting smooth operations. Conversely, negative NWC suggests potential liquidity issues. It’s a useful metric for assessing a company's operational health and ability to fund daily activities without needing additional financing.