What is net working capital?

Question

Quizplus · Accepted Answer

Net working capital is the difference between current assets (such as cash, inventory, and accounts receivable) and current liabilities (such as accounts payable and short-term debt). It represents the amount of capital that a company has available in the short term to meet its operational needs. Choice A is incorrect because net working capital refers specifically to current assets, not all assets. Choice B is incorrect because it includes non-current assets, such as property, plant, and equipment, which are not included in net working capital. Choice D is incorrect because it includes non-current liabilities, such as long-term debt, which are also not included in net working capital.

What Is Net Working Capital