Normally should include cash. But when you calculate free cash flow, the NWCInv should not include cash, equivalents, notes payable, and current portion of debt (short term debt). the portion of WC that you spent cash to buy but that have not been accounted for in Net Income.

Does working capital formula include cash?

Elements Included in Working Capital

include cash and other liquid assets that can be converted into cash within one year of the balance sheet date, including: Cash, including money in bank accounts and undeposited checks from customers.

Does cash affect net working capital?

How Working Capital Impacts Cash Flow. Changes in working capital are reflected in a firm's cash flow statement. ... The company's working capital would also decrease since the cash portion of current assets would be reduced, but current liabilities would remain unchanged because it would be long-term debt.