I read in schweser that when calculating this you exclude cash/cash equivs as well as short term debt…I found a mock example where cash/cash equivs were excluded in te calculation but I can’t find one where short term debt is excluded (the liabilities side always just says current liabilities and doesn’t break it down further)…can someone confirm that you would not include short term debt when calculating the working capital investment?
When calculating net working capital investment you want to examine capital that is working for you. That excludes cash on both sides (assets and liabilities). On the assets side it’s cash and on the liabailities side it’s short term liabilities.
Well we are including current liabilities so that is not true…I am just confirming that short term debt is not included
it is included. working capital refers to operations… debt instruments (short term and long term) are financing activities. think of it this way… if you include it in WC then you shouldnt be including it in net borrowing or cashflow from financing activities.
Ok so short term debt is not Inckuded then in working Investment right? I just want to confirm