ECONOMICS

Detailed explanation-1: -Cash, inventory, and receivables are categorized as current assets and payables as current liabilities. As a result, all the current liabilities are deducted from the current assets to calculate net working capital. Hence, option B is correct.

Detailed explanation-2: -Working Capital = Current Assets – Current Liabilities It is a measure of a company’s short-term liquidity and is important for performing financial analysis, financial modeling, and managing cash flow.

Detailed explanation-3: -NOWC = (cash+ inventories + account receivables)-( account payable + accrued expenses).

Detailed explanation-4: -Net working capital is the aggregate amount of all current assets and current liabilities. It is used to measure the short-term liquidity of a business, and can also be used to obtain a general impression of the ability of company management to utilize assets in an efficient manner.

Detailed explanation-5: -Capital = Assets – Liabilities In the case of a limited liability company, capital would be referred to as ‘Equity’. Capital essentially represents how much the owners have invested into the business along with any accumulated retained profits or losses.