What is 'Trade Working Capital'
Trade working capital is the difference between current assets and current liabilities directly associated with everyday business operations.
BREAKING DOWN 'Trade Working Capital'
Trade working capital differs from working capital. Working capital takes into account all current assets — including cash, marketable securities, accounts receivable, prepaid expenses and inventories — and all current liabilities — including accounts payable, taxes payable, interest payable and accrued expenses. Trade working capital considers only current assets and liabilities that are related to daily operations. Because it defines working capital more narrowly, it is a more stringent measure of a company's shortterm liquidity. A company with more current liabilities than current assets has negative working capital, and this is considered a sign of financial weakness.
Trade Working Capital Calculation
If a company has $10,000 in accounts receivable associated with everyday operations, $2,000 in inventories and $5,000 in accounts payable associated with everyday operations, then it trade working capital is:
$10,000 + $2,000  $5,000 = $7,000.

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Can working capital be negative?
Negative working capital can arise under certain circumstances. Working capital can be negative if a company's current assets ... Read Answer >> 
What can working capital be used for?
Find out what working capital is used for, including how to calculate this financial metric by subtracting current liabilities ... Read Answer >> 
Why working capital management matters
Learn about a company's working capital, and why good working capital management is essential to maintaining a company's ... Read Answer >> 
How do accounts payable show on the balance sheet?
Accounts payable are listed on a company's balance sheet and are considered a shortterm debt obligation owed by a company ... Read Answer >> 
What changes in working capital impact cash flow?
Working capital is the amount of money a company has available to pay its shortterm expenses. Cash flow is the amount of ... Read Answer >> 
Can working capital be too high?
Learn more about the working capital ratio, and understand how an excessively high ratio can be considered a negative in ... Read Answer >>