Operating Working Capital =
Accounts Receivable + Inventory + Work in Progress - Accounts Payable


Cash is excluded from Operating Working Capital as it is considered as a Non-Operating Asset. Whilst cash is a 'Current Asset', the decision to hold cash is not directly related to operations.

For example, if a business decides to build cash for the purpose of a future transaction ,it's operational position hasn't fundamentally changed. However, if you included cash in the calculation for WCA, it would appear that operating efficiency has increased.

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