CS Executive · Corporate Accounting and Financial Management · Working Capital Management
In working capital management, 'net working capital' is best described as:
Net working capital is current assets less current liabilities. It shows the part of current assets financed from long-term sources. The total of current assets alone is gross working capital, which is a different concept.
- ACurrent assets minus current liabilitiesCorrect
- BTotal of all current assets
- CFixed assets minus long-term borrowings
- DCurrent liabilities minus inventory
Explanation
Net working capital is the excess of current assets over current liabilities. Gross working capital is merely the total of current assets, so the second option describes the gross concept, not the net one.
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