Loans and money issues

Non-interest-bearing current liabilities such as accounts payable and accrued expenses are subtracted to calculate net operating working capital. The reason for subtracting these liabilities is to achieve consistency with the definition of NOPLAT. The implicit financing costs associated with these liabilities are included in the expenses that are deducted in calculating NOPLAT. For example, the implicit interest that companies incur when they pay their bills for goods or services in 30 days rather than paying on delivery is included in the cost of goods sold. By subtracting the non-interest- bearing liabilities in calculating capital, we achieve consistency with NOPLAT. Alternatively, we could add back the estimated financing cost associated with non-interest-bearing liabilities and not subtract the liabilities from capital. This approach adds considerable complexity without providing any additional insight into the economics of the business.
Any interest-bearing current liabilities, such as short-term debt and the current maturities of long-term debt, are not subtracted from operating invested capital since the financing cost associated with these liabilities is explicitly excluded from the NOPLAT calculation.