Question

Which formula gives Net Working Capital?

Options

• \[\mathrm{NWC}=\mathrm{CL}-\mathrm{CA}\]

• \[\mathrm{NWC}=\mathrm{CA}-\mathrm{CL}\]

• \[\mathrm{NWC}=\mathrm{CA}+\mathrm{CL}\]

• \[\mathrm{NWC}=\mathrm{CA}\times\mathrm{CL}\]

Answer 1

Net Working Capital is the excess of Current Assets over Current Liabilities. Subtracting Current Liabilities from Current Assets gives \[\mathrm{NWC}=\mathrm{CA}-\mathrm{CL}\].