Net working capital is defined as current assets minus current liabilities.

Question

Quizplus · Accepted Answer

This is the correct definition of net working capital. Current assets include cash, accounts receivable, inventory, and other assets that can be easily converted into cash within the next 12 months. Current liabilities include accounts payable, short-term loans, and other liabilities that must be paid within the next 12 months. Subtracting current liabilities from current assets results in the net working capital, which is an important measure of a company's short-term liquidity.

Net Working Capital Is Defined as Current Assets Minus Current