What Is a Net Investment in Operating Capital?

The meaning of working capital in the broad sense is the total current assets of an enterprise. This concept is mainly used when studying the liquidity and turnover of enterprise assets.

Net working capital

Right!
The meaning of working capital in the broad sense is the total current assets of an enterprise. This concept is mainly used when studying the liquidity and turnover of enterprise assets.
Chinese name
Net working capital
Guangyi
Total current assets of the enterprise
Narrow sense
Total after deducting various current liabilities
Formula
Net working capital = current assets-current liabilities
The concept of working capital has narrow and broad interpretations.
The meaning of working capital in the broad sense is the total current assets of an enterprise. This concept is mainly used when studying the liquidity and turnover of enterprise assets. Narrow working capital refers to the balance of a company's total current assets minus various current liabilities, and is also called net working capital. Because net working capital is considered as a source of funds for corporate non-current asset investment and for the settlement of non-current liabilities, the concept of working capital in the narrow sense is mainly used when studying the company's solvency and financial risk. Therefore, the holding status and management level of an enterprise's working capital are directly related to its profitability and financial risk.
Generalized working capital is a specific concept that includes the total current assets of an enterprise. It is composed of cash and marketable securities, receivables and prepaid accounts, and various types of inventory assets held by the enterprise within a certain period of time. In contrast, working capital in a narrow sense is an abstract concept. It is only the difference between a company's current assets and current liabilities in a certain period of time, and does not specifically refer to an asset. The determination of this difference depends entirely on the company's operating period and Depending on the financial situation, it is an important basis for judging and analyzing the operating status of the company's funds and the degree of financial risk. "
Net working capital refers to the portion of current assets over current liabilities. It is narrow working capital.
Net working capital = current assets-current liabilities
PS: Net working capital = current assets-current liabilities
= (Total assets-Non-current assets)-(Total assets-Shareholders' equity-Non-current liabilities)
= (Shareholders' equity + non-current liabilities)-non-current assets
= Long-term capital-long-term assets

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