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Question
The excess of current assets over current liabilities is called as ___________.
The excess of current assets over current liabilities is called as ___________.
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Solution
The correct option is D Net working capital
The formula for calculation of "Net working capital" is as follows:Net working capital = Total current assets - Total current liabilitiesNet working capital is the aggregate amount of all current assets minus current liabilities. It is used to measure the short-term liquidity of a business, and can also be used to obtain a general impression of the ability of a company management to utilize assets in an efficient manner.
The formula for calculation of "Net working capital" is as follows:
Net working capital = Total current assets - Total current liabilities
Net working capital is the aggregate amount of all current assets minus current liabilities. It is used to measure the short-term liquidity of a business, and can also be used to obtain a general impression of the ability of a company management to utilize assets in an efficient manner.
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