Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 26, Problem 7CQ
Summary Introduction
To explain: The net working capital is positive in real economy. As in ideal economy the net working capital is zero.
Net working capital:
The total amount of current assets and the current liability of the company is net working capital. The company can use working capital to fulfill the short term needs of the company. The company has high net working capital and it is considered as the growing company.
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What does it mean to have negative working capital?
2. What is the difference between Gross Working Capital and Net Working Capital? Explain your
answer (Essay)
a. How do we compute for Gross Working Capital?
b. How do we compute for the Net Working Capital?
c. When will negative working capital occur?
What exactly is negative working capital?
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