How to calculate the Gross investment in operating capital? what does it include?
How to calculate the Gross investment in operating capital? what does it include?
Homework Answers
Operating capital is basically known as working capital. It is calculated to check whether company is able to meet its short term liabilities.
Operating capital = Current Assets - Current liabilities
We can calculate Gross Investment in operating capital by adding change in gross fixed assets and change in net operating working capital. Or it may be calculated by deducting free cash flow from operating cash flow.
Where operating cash flow can be calculated by adding depreciation to the net operating profit after tax.
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How to calculate the Gross investment in operating capital? what
does it include?
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