BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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total assets minus total liabilities.
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current assets minus total liabilities.
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total operating capital minus net income.
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current assets minus current liabilities.
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Detailed explanation-1: -Net working capital = current assets (less cash) – current liabilities (less debt) Here, current assets (CA) = The sum of all short-term assets that are easily convertible into cash like accounts receivable, debts owed to the company, etc. It also includes available cash.
Detailed explanation-2: -Working capital is calculated as current assets minus current liabilities, as detailed on the balance sheet.
Detailed explanation-3: -Net working capital, often referred to as working capital, equals current assets minus current liabilities. Current assets include any assets a business expects to sell or consume within a year, while current liabilities fall due within a year.
Detailed explanation-4: -What is Net Working Capital? Simply put, Net Working Capital (NWC) is the difference between a company’s current assets and current liabilities on its balance sheet. It is a measure of a company’s liquidity and its ability to meet short-term obligations, as well as fund operations of the business.
Detailed explanation-5: -Working capital is calculated by taking a company’s current assets and deducting current liabilities. For instance, if a company has current assets of $100, 000 and current liabilities of $80, 000, then its working capital would be $20, 000.