Net working capital is important because it is a measure of liquidity and represents the net short-term investment the firm keeps in the business.

Question

Quizplus · Accepted Answer

Net working capital is a measure of a company's liquidity and represents the amount of short-term investment that the company retains in the business after paying off its current liabilities. It is important because it reflects a company's ability to meet its short-term financial obligations and remain operational.

Net Working Capital Is Important Because It Is a Measure