Working capital is commonly used to describe a firm’s current or short-term (less than 12-month maturity) assets and liabilities. Gross working capital is the value of the firm’s current assets. Net working capital is the firm’s current assets minus the value of its current liabilities. Thus, a firm has a negative net working capital if its current liabilities exceed its current assets and a positive net working capital if its current assets exceed its current liabilities. Positive net working capital generally indicates that a firm is able to pay off its short-term liabilities quickly and easily. Negative net working capital generally indicates that the [Page 1713]firm is unable to do so. Along with noncurrent (long-term or fixed) assets such as a plant and equipment, working ...