With the objective of solvency regulation, SAP focuses on the balance sheet, rather than the income statement, and emphasizes insurers’ liquidity. Although SAP utilizes the framework established under U.S. GAAP (Generally Accepted Accounting Principles), the SAP and GAAP accounting standards have distinct differences. Working capital is the difference between current assets and current liabilities. It is not to be confused with trade working capital (the latter excludes cash). The basic calculation of working capital is based on the entity's gross current assets.

With the objective of solvency regulation, SAP focuses on the balance sheet, rather than the income statement, and emphasizes insurers’ liquidity. Although SAP utilizes the framework established under U.S. GAAP (Generally Accepted Accounting Principles), the SAP and GAAP accounting standards have distinct differences. Jul 16, 2018 · The parties may define global working capital terms such as GAAP, which is not static and may change between the date on which target working capital is determined and the closing date, to be as of a specific date so that the same GAAP applies to the determination of target working capital and closing working capital.