Trade Working Capital formula
\[ \text{Trade receivables} + \text{Inventory} - \text{Trade payables} \]
Terms
- Inventory, closing balance: Raw materials, work in progress, finished goods and goods for resale, at cost.
- Trade payables, closing balance: Amounts owed to suppliers for goods and services already received.
- Trade receivables, closing balance: Amounts customers owe for goods and services already invoiced.
Result
Trade Working Capital is an amount in currency. Best within a range: both too low and too high are warning signs.
Target
There is no general target; compare with the company’s own history and with peers in the same industry.
Trade Working Capital in Business Central
Inventory (closing balance)
- Category Inventory (6) and every category below it
12 posting accounts in total.
The full account list is on the Inventory page.
Trade payables (closing balance)
- Plus 2 accounts assigned directly: 22100 Accounts Payable, Domestic, 22200 Accounts Payable, Foreign
2 posting accounts in total.
The full account list is on the Trade payables page.
Trade receivables (closing balance)
- Category Accounts Receivable (4) and every category below it
5 posting accounts in total.
The full account list is on the Trade receivables page.
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