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how to calculate the average working capital. The formula for working capital calculation involves a simple subtraction of a companys current liabilities from the total assets currently owned by it. For example say a company has 500000 in cash on hand.
Working Capital Cycle Understanding The Working Capital Cycle from corporatefinanceinstitute.com
For example if a company has 60000 in current assets and 20000 in current liabilities the working capital of the business is 40000. 3800000 and the total current liabilities is Sh. Working capital Current Assets Current Liabilities The working capital formula tells us the short-term liquid assets remaining after short-term liabilities have been paid off.
Below is a balance sheet used to calculate working capital.
WACC E V x Re D V x Rd x 1 - T Lets look at an example. Cash in hand that a company has. Calculating working capital is also useful for assessing whether a business is making efficient use of its resources. Heres the formula youll need.
