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What Is the Meaning of Gross Working Capital?

What is Gross Working Capital?

How to Calculate Gross Working Capital?

Gross working capital is a simple concept. It is basically the value of the short-term assets of the company along with its cash assets. Hence, the formula is going to be something like this:

Gross WC = Total CA


WC means Working Capital

CA mean Current Asset

Total CA = short-term investment + inventory + receivable + marketable security + cash + any other CA

Let’s understand this concept of gross working capital with the help of an example.

Suppose XYZ is an organisation. And here is the updated balanced sheet of the company.

  XYZ Private Limited



Liabilities and Shares 


Cash and equivalent 

Accounts receivable


Short-term investment





Accounts payable 

Accrued expense 

Deferred revenue 

Short-term borrowing





Total Current Assets


Total Current Liabilities 


As you can see, the current asset value of the company is ₹ 1,80,000 which is equal to the gross working capital. But that only represents half of the picture. If we minus the total current liabilities from the total current assets, which is the net working capital of the company, it will be ₹ 1,30,000. Considering this, the company seems to have good financial health.

Significance of Gross Working Capital

Difference Between Gross Working Capital and Net Working Capital

Here are some basic differences between gross and net working capital to grasp the concept of each more clearly.


Gross Working Capital

Net Working Capital


Quantitative in nature

Qualitative in nature

Depict Finances

Cannot reflect the actual financial health of the company

Helps in finding out the actual financial health of the company


Helpful in financial management

Helpful in accounting


Only shows the total fund available to finance current assets

Shows the company’s ability to meet its operating expenses and current liabilities

This article discussed in detail what gross working capital is and how it helps an organisation to identify its immediate future actions. Hopefully, the difference between gross and net working capital will be able to clear any doubt regarding either of those.

FAQs About Gross Working Capital