“Changes in the net working capital” of the company is the increase or decrease in the net working capital of two accounting periods. The increase may be due to an increase in current assets or a decrease in current liabilities. Same way, the decrease may be due to an increase in current liabilities or a decrease in current assets. Before moving forward, let us first try to understand what is net working capital.
Changes in net working capital can be calculated by subtracting the previous year’s net working capital from the current year’s. To present it mathematically,
Changes in Net Working Capital = Net Working Capital of Current Year – Net Working Capital of Previous Year
Changes in Net Working Capital = (Current Assets of Current Year – Current Liabilities of Current Year) – (Current Assets of Previous Year – Current Liabilities of Previous Year)
Changes in Net Working Calculator
How to Calculate using Calculator?
Simply insert the following details into the calculator, which will provide the result by pressing the calculate button.
Current Assets & Liabilities of the Current Period – These values can be obtained from the balance sheet of the current period.
Current Assets & Liabilities of the Previous Period – The values of current assets and current liabilities of the previous period can be obtained from the previous year’s balance sheet. This can be made available from the current year’s balance sheet because usually, as per the standard format, details of the current and previous year are given simultaneously in the same balance sheet.