Net working capital is calculated by taking the difference between:

Question

Quizplus · Accepted Answer

Net working capital represents the difference between a company's current assets (such as cash, accounts receivable, and inventory) and its current liabilities (such as accounts payable and short-term debt). Choice C is the only option that accurately reflects this calculation. Choice A is incorrect because it includes all assets and liabilities, regardless of whether they are current or long-term. Choice B is incorrect because it only includes inventory and accounts payable, and does not account for other current assets and liabilities. Choice D is incorrect because it only includes cash and long-term debt, and does not account for other current assets and liabilities.

Net Working Capital Is Calculated by Taking the Difference Between