Asked by Mckenna Grimm on Jun 01, 2024
Verified
The term "net working capital" means:
A) the firm's gross working capital minus spontaneous financing.
B) the firm's cash, accounts receivable, and inventory minus short-term payables and accruals.
C) the firm's current assets minus its current liabilities.
D) All of the above
Net Working Capital
The difference between a company's current assets and current liabilities.
Short-Term Payables
Liabilities owed by a company that are due within one year, often including accounts payable, wages, and taxes.
Gross Working Capital
The total amount of a company's current assets, which are assets likely to be converted into cash within one year.
- Comprehend the principles of net working capital and the elements that affect its computation.
- Identify and explain the components of net working capital.
Verified Answer
MB
Marissa BasalduJun 06, 2024
Final Answer :
D
Explanation :
All the options provided are different ways to describe or calculate net working capital, highlighting its essence as current assets minus current liabilities, while also considering aspects like spontaneous financing and specific components of current assets and liabilities.
Learning Objectives
- Comprehend the principles of net working capital and the elements that affect its computation.
- Identify and explain the components of net working capital.