Net-Net Working Capital (NNWC)
NNWC is a harsher cousin of NCAV used when liquidation value needs a more conservative haircut.
Published: 2026-02-14
NNWC tightens the classic NCAV test by discounting assets that may realize less than book value in a stressed sale.
Formula
NNWC is commonly expressed as:
cash + 0.75 x receivables + 0.5 x inventory - total liabilities
It is stricter than Net Current Asset Value because it assumes some current assets will convert to cash below their accounting value.
Use cases
- Rank net-nets when inventories or receivables quality is questionable.
- Stress-test thinly traded microcaps where liquidation value must be conservative.
- Combine with share-count data to see whether dilution is eroding per-share protection.
It works especially well with Margin of Safety and How to Evaluate Net-Net Risk when you need a harsher liquidation-based lens.