A small business has current assets of ₹6,00,000 and current liabilities of ₹2,25,000. Calculate the net working capital required.
Answer
₹3,75,000
The correct answer is ₹3,75,000 — Perform the subtraction to obtain NWC = ₹3,75,000.
Step-by-step solution
- Write the formula for net working capital: NWC = Current Assets – Current Liabilities, because it measures the surplus of short‑term assets over short‑term obligations.
- Substitute the given values: NWC = ₹6,00,000 – ₹2,25,000.
- Perform the subtraction to obtain NWC = ₹3,75,000.
Common mistake: Subtracting liabilities from assets incorrectly or forgetting to include all current assets.
Concept tested: Net working capital calculation
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