Syntax error Differentiate between Net working capital and Gross working capital.

Differentiate between Net working capital and Gross working capital.

The major differences between net working capital and gross working capital are as follows −

Net working capital

  • Qualitative in nature.
  • Tells about whether company can meet its operating expenses and its current liability.
  • Net working capital is result of difference between current and current liability.
  • Concept used in accounting system.
  • Suitable for partnership firms and sole traders.
  • Reveals company’s financial position.
  • Companies net working capital increases when, there is increase in retained profits and sale of assets.

Gross working capital

  • Quantitative in nature.
  • Tells about overall amount at hand for financing current assets.
  • Gross working capital is the result of sum of all current assets.
  • Concept used in financial management.
  • Suitable for companies.
  • Financial position of a company is not revealed.
  • Gross working capital will increase when company’s borrowing increases.
Updated on: 2020-09-25T14:03:52+05:30

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