Gross Working Capital refers to the firm’s investment in current assets

Ø Gross Working Capital refers to the firm’s investment in current assets.
Ø Net Working Capital means the difference between current assets and current
liabilities, and therefore, represents that position of current assets which the
firm has to finance either from long-term funds or bank borrowings.
Ø Operating Cycle is defined as the time duration which the firm requires to
manufacture and sell the product and collect cash. Thus operating cycle refers to
the acquisition of resources, conversion of raw materials into work-in-process
into finished goods, conversion of finished goods into sales and collection of sales.
Larger is the operating cycle, larger will be the investment in current assets. In
practice, firms are acquire resources on credit. To that extent, firm’s need to
raise working finance is reduced.
Ø Net Operating Cycle is used for the difference between operating cycle (or
gross operating cycle) and the payment deferral period (or the period for which
creditors remain outstanding).