Asked by Ninh Thi Thuy Trang on Jul 17, 2024
Verified
Net working capital is defined as:
A) Total liabilities minus shareholders' equity.
B) Current liabilities minus shareholders' equity.
C) Fixed assets minus shareholders' equity.
D) Total assets minus total liabilities.
E) Current assets minus current liabilities.
Net Working Capital
The difference between a company's current assets and its current liabilities, indicating the liquidity and operational efficiency of the business.
Current Assets
Short-term assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.
Current Liabilities
Obligations a company needs to pay off within one year or within its operating cycle, whichever is longer.
- Determine and compute variations in net working capital.
Verified Answer
TS
taravat sharafatJul 23, 2024
Final Answer :
E
Explanation :
Net working capital is calculated as current assets minus current liabilities, reflecting a company's short-term financial health and its ability to cover its short-term liabilities with its short-term assets.
Learning Objectives
- Determine and compute variations in net working capital.