How this calculator works
Include cash required for operations, trade receivables and inventory. Subtract trade payables and accrued operating expenses. Leave out excess cash, marketable securities and interest-bearing debt. The subtotal mode accommodates other operating current accounts. Some valuation models exclude all cash; set operating cash to zero for that convention and keep it consistent.
Formula
Current operating assets = operating cash + receivables + inventory. Current operating liabilities = trade payables + accrued operating expenses. NOWC = operating current assets - operating current liabilities.
Worked example
$10,000 of operating cash, $60,000 of receivables and $50,000 of inventory total $120,000. Subtracting $20,000 of payables and $10,000 of accruals gives NOWC of $90,000.
Advertisement
Frequently asked questions
How does this differ from working capital?
Working capital includes all current assets and liabilities. NOWC removes financing accounts and non-operating assets.
Can NOWC be negative?
Yes. Operating creditors may finance more than the operating current assets, particularly in businesses collecting customer cash early.
Do I include a bank overdraft?
Exclude interest-bearing financing from operating liabilities in this model. Do not subtract the same overdraft again as trade credit.