Net Operating Working Capital (NOWC) is a financial measure used to gauge the short-term liquidity of a company. It’s calculated by taking all current assets, such as cash, accounts receivable and inventory, then deducting all current liabilities, such as accounts payable and accrued expenses. The result equals the working capital available for operating activities. In other words, it tells us how much liquid funds the business has on hand to manage its day-to-day operations. By monitoring NOWC closely, companies can stay agile in responding to market changes and maximize their profitability.