Net working capital is defined as:
A) total liabilities minus shareholders' equity.
B) current liabilities minus shareholders' equity.
C) fixed assets minus long-term liabilities.
D) total assets minus total liabilities.
E) current assets minus current liabilities.

Question

Quizplus · Accepted Answer

Net working capital is the difference between a firm's current assets and its current liabilities. Current assets include cash, accounts receivable, and inventory, while current liabilities are obligations that must be paid within one year, such as accounts payable and short-term loans. Therefore, the correct answer is E - current assets minus current liabilities.

Net Working Capital Is Defined As