Practicing Success

Target Exam

CUET

Subject

Entrepreneurship

Chapter

Resource Mobilisation

Question:

Calculate the net working capital from the following:

Work in progress

  -  

₹10,000

Short term borrowing

  -  

₹6,000

Accounts receivable

  -

₹5,400

Outstanding expenses

  -

₹2,600

Cash-in-hand

  -

₹2,200

Long term investment

  -

₹45,000

Options:

₹17,600

₹8,600

₹9,000

₹26,200

Correct Answer:

₹9,000

Explanation:

o calculate the net working capital, we need to subtract the current liabilities from the current assets.

Current liabilities = Short term borrowing + Outstanding expenses = ₹6,000 + ₹2,600 = ₹8,600

Current assets = Work in progress + Accounts receivable + Cash-in-hand = ₹10,000 + ₹5,400 + ₹2,200 = ₹17,600

Net working capital = Current assets - Current liabilities = ₹17,600 - ₹8,600 = ₹9,000

Therefore, the net working capital is ₹9,000.