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Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital is equal to current assets.
Net working capital to sales ratio [19] ... Receivables / Net Sales × 365 Days Payables conversion period
Easy: Working capital is derived from the balance sheet and equals the sum of current assets such as cash and inventory after subtracting current liabilities such as accounts payable and short ...
The second difference is that the free cash flow measurement makes adjustments for changes in net working capital, where the net income approach does not. Typically, in a growing company with a 30-day collection period for receivables, a 30-day payment period for purchases, and a weekly payroll, it will require more working capital to finance ...
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Asset turnover can be furthered subdivided into fixed asset turnover, which measures a company's use of its fixed assets to generate revenue, [3] and working capital turnover, which measures a company's use of its working capital (current assets minus liabilities) to generate revenue. [4]