Net Working Capital Tragedy
Hi there,
I've been trying to calculate Net Working Capital in this exercise for a while but no success. Should I include loan receivables and lease liabilities? I would really appreciate any help!
"The company has the following short-term assets and liabilities:
inventories: 10 million, trade receivables: 50 million, loan receivables: 2 million, trade liabilities: 90 million, lease liabilities: 10 million. Calculate Net Working Capital."
(30,000,000)
NWC Calc:
Assets - include inventories and trade receivables. exclude loan receivables
Liabilities - only include trade liabilities.
NWC: Current Assets (10M + 50M = 60M) minus Current Liabilities (90M) gives you a negative 30M in NWC
Exclude the items related to loans since this will be treated as debt or debt-like for NWC purposes
Why exclude lease liabilities
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