A business example
A simplified operating calculation includes ₹2 lakh inventory, ₹1.5 lakh trade receivables and ₹1 lakh trade payables.
Funds tied up
Inventory and receivables together represent ₹3.5 lakh.
Supplier funding
Trade payables provide ₹1 lakh of operating funding.
Net operating amount
₹3.5 lakh − ₹1 lakh = ₹2.5 lakh.
What this shows
This is a narrow operating working-capital calculation. It excludes cash, borrowing and other balances; a broader current-assets-minus-current-liabilities measure can differ.
What it is often confused with
Net working capital often means current assets less current liabilities; operational analyses may use narrower definitions.
What to look at in your business
State the definition and inspect ageing and payment timing, not only the total.
Context and further reading
This entry explains the business term. The related guide below provides the next layer of context; any applicable legal test depends on the transaction and relevant period.
Kosha.Services · Updated 2 October 2026