Net working capital is best represented as
A)short-term assets only.
B)short-term assets and short-term liabilities.
C)long-term assets and short-term assets.
D)long-term assets and long-term liabilities.

Question

Quizplus · Accepted Answer

Net working capital is calculated by subtracting short-term liabilities from short-term assets. Therefore, it is represented as short-term assets and short-term liabilities. Option A is incorrect because it excludes short-term liabilities. Option C is incorrect because it includes long-term assets, which should not be considered when calculating net working capital. Option D is incorrect because it includes long-term liabilities, which are also not relevant in the calculation.

Net Working Capital Is Best Represented as