How is the net working capital calculated?
A) Net working capital = total liabilities minus retained earnings
B) Net working capital = total assets minus current assets
C) Net working capital = total liabilities minus current liabilities
D) Net working capital = current assets minus current liabilities
E) Net working capital = total equity minus retained earnings

Question

Quizplus · Accepted Answer

Net working capital is calculated by subtracting current liabilities from current assets. This calculation gives an indication of a company's ability to pay off its short-term obligations using its current assets. Option D accurately represents this calculation.

How Is the Net Working Capital Calculated