Non Operating Working Capital

NON OPERATING WORKING CAPITAL

Although we have considered in sufficient detail the timing differences between
inflows and outflows that arise during the operating cycle, we have until now
always assumed that capital expenditures were paid for when purchased and that
nonrecurring costs are paid for when they are recognized in the income statement.

Naturally, there may be timing differences here, too, giving rise to what is known as
non-operating working capital.
Non-operating working capital, which is not a very robust concept from a
theoretical perspective, is hard to predict and to analyze, because it depends on
individual transactions, unlike operating working capital which is recurring.

In practice, non-operating working capital is a catch-all category for items that
cannot be classified anywhere else. It includes amounts due on fixed assets,
dividends to be paid, extraordinary items, etc.

Click here for government certification in Accounting, Banking & Finance