How Is the Working Capital Calculated

question 2

Multiple Choice

How is the working capital calculated?

• A) Working capital need - Net cash
• B) Fixed assets - Equity and Long-term liabilities
• C) Current assets (except cash)- Current liabilities
• D) Equity and Long-term liabilities - Fixed assets

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Definitions:

Income Tax Rate

The percentage of income that is paid to the government as tax. It can vary depending on the income level and jurisdiction.

Straight-Line Depreciation

An approach to spreading out the expense associated with a long-term asset evenly over the period it is expected to be used.

Working Capital

The gap between a firm's immediate assets and liabilities, showcasing the available liquidity for daily business activities.

Operating Cash Inflow

Cash generated from a company's primary business activities, excluding financing or investment related transactions.