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Definition

Net working capital concept

Net working capital is the current assets out of total current liabilities. It is used to measure the short-term liquidity of a business, and can also be used to obtain a general impression of the ability of company management to utilize assets in an efficient manner.

 *  Net Working Capital= Current assets—Current liabilities.

The concept of Net working capital is certified by AICPA (American Instituteof Certified Public Accountants).In present, working capital means "Net working capital concept" in Book-keeping.

According to M.Y. Khan & P.K. Jain,” Net working capital can alternatively be define is that part of the current assets which is financed with long term fund.”

According to I.M. Pandey,” Net working capital refers to the difference between current assets and current liabilities.”

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