IBPS / SBI PO STUDY MATERIAL ON IMPORTANT TERMS ON BANKING AWARENESS, FINANCE AWARENESS & ECONOMIC AWARENESS
1.Net Working Capital Formula : NWC = CURRENT ASSETS - CURRENT LIABILITY The formula for net working capital (NWC), sometimes referred to as simply working capital, is used to determine the availability of a company's liquid assets by subtracting its current liabilities. Use of Net Working Capital Formula Net working capital is used in various other financial formulas that deal with cash flows. Examples of these formulas include the free cash flow to equity formula and free cash flow to firm formula. In the formula for free cash flow to equity, the change in net working capital is subtracted. An increase in net working capital is considered a negative cash flow and not available for equity. In other words, an increasing requirement for capital for short term operations in the company is not available to equity. The variables of the net working capital formula are the same as those used in the current ratio. The current ratio formula instead divides current assets...