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This working capital Excel template lets you quickly calculate both the working capital and the working capital ratio.

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Working capital management involves the relationship between a firm’s short-term assets and its short-term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash.


1. What is working capital?

Working capital is the amount of assets a company has that are readily convertible to cash within one year.

2. How do you calculate net working capital?

Net working capital is total current assets minus total current liabilities.

3. What are examples of working capital?

Examples of working capital are accounts receivable, inventory, cash, and prepaid expenses.

4. What are the different types of working capital?

The two types of working capital are the operating cycle and the recirculation period.

5. Why is net working capital important?

Net working capital is important because it represents a company's ability to satisfy its short-term financial obligations.

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