Finimpact
Is net working capital the same as working capital?
Yes, net working capital and working capital are the same exact thing.
What’s a good target for net working capital?
The right amount of net working capital varies based on your business size and industry. In general, it’s useful to aim for a ratio of 2:1 (current assets: current liabilities). But you’ll need to run the numbers for your own business to find what makes the most sense.
What is net capital outflow?
Capital outflow refers to assets moving out of the country. Typically, net capital outflow is the result of economic or political instability.
What does a change in net working capital mean?
A change in net working capital means that your current liabilities or current assets have shifted. If the change is positive, that’s an improvement for your net working capital. If the capital is negative, that’s usually not a good sign for the financial health of the business.

Conclusion

Now that you know what net working capital is, you can capitalize on their net working capital knowledge to assess the financial health of their business. After assessing where your net working capital stands, you can make necessary adjustments to improve the liquidity of your business.

If you'd like to learn more about working capital funding opportunities, take a look at our list of the best working capital loans.


About the Authors

Sarah Sharkey

Written by: Sarah Sharkey

Personal Finance Writer

Sarah Sharkey is a personal finance writer who enjoys helping people make better financial decisions. Sarah enjoys traveling, hiking and reading when she is not writing.

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Kal Salem

Reviewed by: Kal Salem

CPA, PMP and Finance Consultant

A CPA and finance professional working with small businesses to educate owners and grow alongside their businesses. Kal started his career in public accounting supporting SEC, regulatory, and both internal and external audits. He holds a Masters in Accounting and a BS in Supply Chain Management. Owner at Salem CPA Services LLC.

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Somer G. Anderson

Fact-checked by: Somer G. Anderson

Accounting and Finance Professor

Somer G. Anderson has been working in the Accounting and Finance industries for over 20 years as a financial statement auditor, a finance manager in a large healthcare organization, and a Finance and Accounting professor at Maryville University.

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