Question

Working capital is calculated as?

Options

• NWC = Current Assets - Current Liabilities

• NWC = Current Liabilities - Current Assets

• Both (1) and (2)

• None of the above

Answer 1

Both (1) and (2)

Explanation -

Net working capital, on the other hand, is the difference between current assets and current liabilities. Current liabilities are those that are due for payment right now, such as bills payable, outstanding expenses, creditors, and so on. The difference between current assets and current liabilities is used to determine net working capital.

NWC = Current Assets - Current Liabilities, for example.