Which of the Following Formulas Will Correctly Calculate Net Working

question 49

Multiple Choice

Which of the following formulas will correctly calculate Net Working Capital?

• A) Cash + Inventory + Receivables + Payables
• B) Cash + Inventory + Receivables - Payables
• C) Cash + Inventory - Receivables + Payables
• D) Cash - Inventory + Receivables + Payables

---

Definitions:

Controllable Margin

The portion of profit or contribution margin that a manager has direct control over, before fixed costs and overhead are deducted.

Responsibility Report

A management tool that collects and reports planned and actual financial information by responsibility centers.

Direct Labor

Workers or employees who are directly involved in the manufacturing of products or delivery of services.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.