Question

Which one of the following emphasizes the qualitative aspects of working capital management?

• A. Gross working capital
• B. Quick working capital
• C. Net working capital
• D. None of the above

Answer 1

Answer: (C)

Net working capital

Funds are also needed for short term purposes for the purchase of raw materials, payment of wages and other day to day expenses, etc., these funds are known as Working Capital.

This concept gives more emphasis on the qualitative aspect rather than the quantitative aspect of working capital. According to this concept the excess of the current assets over current liabilities is known as working capital. If the current assets and current liabilities are equal; it indicates absence of working capital in the business.