Net working capital is defined as ________.
A) total assets minus total liabilities
B) total liabilities minus total assets
C) current liabilities minus current assets
D) current assets minus current liabilities

Question

Quizplus · Accepted Answer

Net working capital is the difference between a company's current assets (cash, accounts receivable, inventory) and its current liabilities (accounts payable, short-term debt), therefore option D is the correct answer. Option A and B refer to total assets and liabilities rather than current assets and liabilities. Option C uses current liabilities minus current assets, which is the opposite of the correct calculation.

Net Working Capital Is Defined as ________