OPERATING WORKING CAPITAL   Definition Compared to Working capital, Operating working capital narrows the scope of Current assets and Current liabilities by strictly taking into account operating current assets (Accounts receivable and inventory) and current liabilities (Accounts payable).   Calculation rules Operating working capital = [Current assets - Cash & Securities]   - [Current liabilities - Non interest bearing current liabilities] where :   Non interest bearing current liabilities = Current liabilities   - Short term debt   - Current portion of long term debt   Comment The basic concept of working capital is relatively simple : it is the excess of current assets over the current liabilities. The importance attached to working capital as a measure of liquidity and solvency has caused some companies, desiring to present their current condition in the most favorable light, to stretch the definition of what constitutes a current asset and a current liability. For this reason some analysts will use the operating working capital as a substitute to the Working Capital.   Reference    Accounts payable    Accounts receivable    Cash & Securities    Current assets    Current liabilities

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