Net Working Capital (NWC):
Net working capital is a very frequently used term. There are two ways to understand net working capital. First one says it is simply the difference of current assets and the current liabilities in the balance sheet of a business. The other understanding discloses little deeper or hidden meaning of the term. As per that, NWC is that part of current assets which are indirectly financed by long term assets. Compared to gross working capital, net working capital is considered more relevant for effective working capital financing and management.
Operating Cycle (cash conversion cycle):-