Difference between gross working capital and net working capital:

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gross working capital and networking capital are the most important concepts of working capital.Both are the parts of working capital,in spite of that some differences can be identified.Let us reflect light on this matter.

1.Gross working capital is quantitative concept.It involves the total current assets of a firm.But net working capital in a qualitative concept indicating the liquidity position of the firm.
2.the gross working capital of a firm is always positive.But the net working capital maybe positive,negative and zero.
3.Both concepts of working capital have the functional significance.Gross working capital concept is financial or going concern concept and deals with the problems of managing individual current assets in short term.
4.Both of working capital have their own merits.The gross concept of working capital is suitable to the company form of organization.But the net working capital maybe suitable only for proprietary form of organizations-sole trader and partnership firm.

In summary,it may be emphasized that both net and gross working capital are equally important for the efficient management of working capital.

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