The balance sheet lists what a company owns (assets) and what it owes (liabilities) on one date. What is left belongs to shareholders: equity = assets - liabilities.
Current items turn into cash or come due within a year: cash, receivables, inventory and prepaid costs; payables, accrued expenses and debt due within a year.
- Working capital = current assets - current liabilities.
- Operating working capital = receivables + inventory - payables. It leaves out cash and debt, which are financing, and it's the version models forecast.
- Net debt = all debt - cash. A company with more cash than debt has net cash, which shows as a negative net debt.
- Current ratio = current assets / current liabilities, a quick read of short-term liquidity.
Short-term debt counts as debt for net debt, even though it also sits in current liabilities.