Which of the following mathematical expressions is used to compute the net working capital of a firm?
A)Net working capital = Total liabilities − Retained earnings
B)Net working capital = Total assets − Current assets
C)Net working capital = Total liabilities − Current liabilities
D)Net working capital = Current assets − Current liabilities
E)Net working capital = Total equity − Retained earnings

Question

Quizplus · Accepted Answer

Net working capital is calculated by subtracting current liabilities from current assets, as it represents the amount of liquid assets that a company has available to meet its immediate financial obligations. Option D is the only expression that subtracts current liabilities from current assets.

Which of the Following Mathematical Expressions Is Used to Compute