Net Working Capital is a financial metric that measures the total liquidity of a company. It’s calculated by subtracting current liabilities from current assets and provides an indication of a company’s ability to pay off its short-term obligations and fund day-to-day operations. The equation for working capital is Current Assets minus Current Liabilities = Net Working Capital. This simple formula can be used to assess a company’s current financial health, as well as project future performance. A positive net working capital indicates that the company has enough money on hand to cover its immediate debt obligations, while a negative number indicates an inability to meet those commitments. Knowing this information can help businesses stay on top of their finances and remain competitive in the market.