If a company's current assets total $100,000 and its total liabilities are $50,000, what is its net working capital?

If a company's current assets total $100,000 and its total liabilities are $50,000, what is its net working capital?

• A. $150,000
• B. $50,000
• C. $100,000
• D. $75,000

Answer: (B)

Net working capital is calculated as the difference between a company's current assets and its total liabilities. In this case, current assets are given as $100,000, and total liabilities are $50,000. To determine the net working capital, you subtract total liabilities from current assets: Net Working Capital = Current Assets - Total Liabilities Net Working Capital = $100,000 - $50,000 Net Working Capital = $50,000 This figure indicates the liquidity available to the company for its day-to-day operations, showing how much current assets exceed current liabilities. This positive net working capital implies that the company has sufficient resources to cover its short-term obligations. The other choices do not reflect the correct computation based on the provided figures of assets and liabilities, thus validating the conclusion that $50,000 is indeed the correct net working capital.

Net working capital is calculated as the difference between a company's current assets and its total liabilities. In this case, current assets are given as $100,000, and total liabilities are $50,000.

To determine the net working capital, you subtract total liabilities from current assets:

Net Working Capital = Current Assets - Total Liabilities

Net Working Capital = $100,000 - $50,000

Net Working Capital = $50,000

This figure indicates the liquidity available to the company for its day-to-day operations, showing how much current assets exceed current liabilities. This positive net working capital implies that the company has sufficient resources to cover its short-term obligations. The other choices do not reflect the correct computation based on the provided figures of assets and liabilities, thus validating the conclusion that $50,000 is indeed the correct net working capital.