Working capital = Current assets − Current liabilities
Working capital is current assets minus current liabilities. It represents the cash a business needs tied up to operate day to day, and its change explains the difference between profit and cash in a period.
How it is calculated
Working capital = Current assets − Current liabilities. In management analysis the operating version is used: Receivables + Inventory − Payables, excluding cash and financial debt. It is also called net working capital.
Example with numbers
Current assets 1,100,000 (cash 300,000, receivables 600,000, inventory 200,000). Current liabilities 500,000 (payables 300,000, short-term debt 200,000). Working capital: 600,000. Operating working capital, excluding cash and debt: 600,000 + 200,000 − 300,000 = 500,000.
How Fibady does it
The consolidated balance sheet is recalculated with every ERP sync, and working capital appears as a subtotal in the unlimited-level P&L and balance sheet, in each entity's currency and in the group's. Its change flows into the indirect cash flow without intermediate spreadsheets.