Calculate working capital

Watch the following video as it provides context and goes through an example of how you can calculate working capital using the formula:

Current assets – current liabilities

Watch: Working capital explained (4:45) [1]

As you saw in the video, the most appropriate method for calculating working capital is using a balance sheet.

Share your thoughts

If you search and read about McDonald’s financial data between 1999 and 2000, you will find that the organisation showed a negative working capital and today it still manages to function as a successful business.

Do you think negative working capital can ever be a benefit? How do you think negative working capital might have benefitted McDonald’s?

References

_{1. Working capital explained [Video]. The Finance Storyteller; 2019 Jan 30. Available from: https://www.youtube.com/watch?v=XvHAlui-Bno}