For most corporations, net working capital is:

Question

Quizplus · Accepted Answer

Net working capital is the difference between current assets and current liabilities. It represents the liquidity available to a company to fund its operations. Positive net working capital ensures that a company has enough funds to cover its short-term obligations and to support its cash conversion cycle, which is the time it takes to convert inventory into cash. As such, it is usually desirable for a company to maintain a positive net working capital, especially during the cash conversion cycle. Therefore, option C is the correct choice. Option A is incorrect because net working capital is not necessarily negative during the inventory period, as it depends on the specific characteristics of the company's operations. Option B is incorrect because net working capital can be either positive or negative, depending on the difference between current assets and current liabilities. Option D is incorrect because net working capital is always present, regardless of the period of the year.

For Most Corporations, Net Working Capital Is