2 min read
Definition
Gross working capital is a business's total current assets — cash, receivables, stock and other assets expected to turn to cash within a year — without deducting current liabilities. It is the fuller measure alongside net working capital, which nets off what you owe.
In plain terms
Where net working capital tells you your short-term cushion, gross working capital tells you the total pool of short-term assets your trading cycle runs on. Analysts use both to understand how a business funds and turns over its current assets.
Why it matters
Gross working capital matters when assessing how much investment a growing business needs in stock and debtors. As sales rise, gross working capital rises with them — the essence of the overtrading risk.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.