Define each of the following terms: a. Working capital; net working capital; net operating working capital
Define each of the following terms:
Working capital - Working capital is the indicator of a firm's short-term financial position. Moreover, it can also be said as the amount needed to settle routine operations.
Net working capital - It refers to the difference between current assets and current liabilities of the company. Current assets include cash, receivable whereas current liabilities include accounts payable, note payable, etc.
Operating working capital - It determines company's solvency as well as liquidity position. It is computed by subtracting current liabilities from operating current assets.