Net working capital = Current assets − Current liabilities; operating = Receivables + Inventory − Payables
Net working capital is the difference between current assets and current liabilities. In its operating version, it is the cash the business needs tied up in receivables and inventory, less the amount financed by suppliers.
How it is calculated
Net working capital = Current assets − Current liabilities. Operating working capital = Receivables + Inventory − Payables. Its change between two closes is what is adjusted in the indirect cash flow: if it rises, it consumes cash; if it falls, it releases cash.
Example with numbers
March close: receivables 600,000, inventory 200,000, payables 300,000; operating working capital 500,000. June close: receivables 700,000, inventory 220,000, payables 320,000; working capital 600,000. The +100,000 change is cash the business absorbed even though the result was positive.
How Fibady does it
The consolidated balance sheet comes from each entity's ERP, so working capital is calculated per entity and for the group with every sync, and its change feeds the indirect cash flow directly. Every balance opens down to the entries that make it up.