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As I remember from my MBA classes, net current assets is the amount of capital a company creates or consumes in a period of time. It is the difference in current assets and current liabilities. Current assets is the amount of cash and cash equivalents (or inventory, etc that can be converted to cash quickly to pay the bills) and current liabilities are the bills that are due.
Below are the formal definitions from Investorwords.com, a website that I've found useful for finding formal definitions for financial terms. Sorry about the long paragraphs of quoted text.
Net Current Assets is defined as --quote--
Current assets minus current liabilities. This amount indicates how much capital is being generated or used up by day-to-day activities. If net current assets are negative, the company may have difficulty financing its day-to-dayoperations. Also called working capital or current capital.
--/quote--
Where current assets is defined as --quote--
A balance sheet item which equals the sum of cash and cash equivalents, accounts receivable, inventory,marketable securities, prepaid expenses, and other assetsthat could be converted to cash in less than one year. A company's creditors will often be interested in how much that company has in current assets, since these assets can be easily liquidated in case the company goes bankrupt. In addition, current assets are important to most companies as a source of funds for day-to-day operations. --/quote--
And current liabilities is defined as --quote--
A balance sheet item which equals the sum of all money owed by a company and due within one year. also called payables or current debt. --/quote-
Below are the formal definitions from Investorwords.com, a website that I've found useful for finding formal definitions for financial terms. Sorry about the long paragraphs of quoted text.
Net Current Assets is defined as --quote--
Current assets minus current liabilities. This amount indicates how much capital is being generated or used up by day-to-day activities. If net current assets are negative, the company may have difficulty financing its day-to-dayoperations. Also called working capital or current capital.
--/quote--
Where current assets is defined as --quote--
A balance sheet item which equals the sum of cash and cash equivalents, accounts receivable, inventory,marketable securities, prepaid expenses, and other assetsthat could be converted to cash in less than one year. A company's creditors will often be interested in how much that company has in current assets, since these assets can be easily liquidated in case the company goes bankrupt. In addition, current assets are important to most companies as a source of funds for day-to-day operations. --/quote--
And current liabilities is defined as --quote--
A balance sheet item which equals the sum of all money owed by a company and due within one year. also called payables or current debt. --/quote-
source(s):
www.investorwords.com
www.investorwords.com
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voted helpful: davepamn
Net current assets are normally shown in the balance sheet itself. If not shown, you can calculate it by subtracting "Current Liabilities" from "Current Assets". Current Liabilities and Current assets can be calculated from balance sheet.
The Net Asset Value of a fund is calculated on daily basis, so at the end of the trading day you will know at what price you can both buy and sell a particular share that is part of a fund. This is due to the fact that mutual funds hold securities. In contrast the prices of stocks change every second, so when you trade stocks toy should be on a constant watch.
Net Asset Value Calculation
Follow these simple steps:
current market value of net assets = securities - liabilities = A
NAV = A / # outstanding shares
Explanation: In order to calculate the Net Asset Value of a fund, you need the current market value of its net assets. It is calculated by subtracting its liabilities from the fund's securities. After you have got this number all you have to do is to divide it by the number of outstanding shares.
Example: The net assets of a fund are equal to $40 million. The fund holds 1 million shares. Therefore, NAV = $40 ($40 million / 1 million)
Net Asset Value Calculation
Follow these simple steps:
current market value of net assets = securities - liabilities = A
NAV = A / # outstanding shares
Explanation: In order to calculate the Net Asset Value of a fund, you need the current market value of its net assets. It is calculated by subtracting its liabilities from the fund's securities. After you have got this number all you have to do is to divide it by the number of outstanding shares.
Example: The net assets of a fund are equal to $40 million. The fund holds 1 million shares. Therefore, NAV = $40 ($40 million / 1 million)
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Net Current Assets = Current Assets - Current Liabilities.
Does Net Current Assets give a false sense of security, if the company has large total liabilities? Can a period of accelerated growth make the company look healthier financially.