Financial planning glossary
Working capital
Current assets minus current liabilities. A model may use a narrower operating working-capital measure, so check which accounts it includes.
What does this mean in a model?
Illustration in USD at one date: $30,000 of current assets minus $18,000 of current liabilities gives $12,000 of working capital. A forecast of inventory plus trade receivables minus trade payables is a narrower operating measure; it is not the same as a cash reserve.
Check the definition before comparing results
Read the workbook's labels, period, units and calculation notes. Two similarly named outputs can measure different things.
Read financial assumptions