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Finance / July 19, 2018 / Isabella Mccray

Analysts and investors will frequently refer to something called the net working capital. Or a lot of times they will just call it working capital for short. So working capital is very simple it’s like the current assets minus the current liabilities of a firm. When valuing the companies the "change in working capital" is more useful.

As discussed cash flows can either be positive or negative. It is calculated by subtracting the cash balance at the beginning of a period which is also known as opening balance, form the cash balance at the end of the period (could be a month, quarter or a year) or the closing balance.

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