Net Working Capital (NWC) is an essential measure of a company’s financial and operational health. It is calculated by subtracting current liabilities from current assets, providing an indication of the short-term liquidity available to the business. The formula for NWC can be expressed as: NWC = Current Assets – Current Liabilities. This figure helps lenders, investors, and creditors assess the risk they take on when doing business with a given company. By understanding a company’s NWC position, it becomes easier to determine whether it is sufficiently able to pay its bills during a given accounting period.