what is average net working capital? when it appear in the question, and the question ask us to calculate E/P, we should not use it ? what is the difference between: share holder’s equity and equity, working capital. are they all the same? Thanks.
Is equity the same as working capital? These are Accounting 101 questions. You need to crack a book instead of posting these questions here. I hope you’re not taking the exam this weekend.
Equity = Assets - liabilites NWC= current assets - current liabilities shareholders equity = equity - preferred shareholders equity
> what is the difference between: share holder’s equity and equity, working capital. are they all the same? No, they’re not all the same. * Working capital is current assets - current liabilities (net). * Equity is, um, Assets - Liabilities. Also known as Net Assets and occasionally stockholders’ equity or book value of equity. The only thing I can think of related to E/P (P/E) requiring WC is a FCFE or OFCF calculation, both of which require you to pull out the change in WC. HTH
smeet Wrote: ------------------------------------------------------- > shareholders equity = equity - preferred > shareholders equity No. Look at any real company’s balance sheet and you’ll see that the caption Shareholder’s (or stockholder’s) Equity includes preferred stock. Shareholders equity - preferred equity = common (shareholders’ ) equity