From the following calculate Gross Working capital and Net Working capital, Creditors ₹10000, cash ₹20000, stock ₹5000/-.

₹25000, ₹15000

The correct answer is option (3) - ₹25,000, ₹15,000

Gross working capital (also known as current capital or circulating capital) is the sum total of all current assets of the business.

Net Working Capital means Current assets- Current Liabilities

Current assets include cash, inventory (raw materials, work in process, finished goods, spares etc) and accounts receivable (or trade debtors). Current assets comprise items that would get converted in to cash in the short-run, say, within the normal operating cycle (or cash conversion cycle) of the business.

Current liabilities represent short-term source of funds and are expected to fall due or mature for payment in a short period, generally within a year. These typically consist of payables to vendors and service providers, employees, other short term borrowings and provisions.

In the present case,

Creditors: Rs 10,000 : Current Liabilities

Cash: Rs 20,000 : Current Assets

Stock: Rs 5,000 : Current Assets

Thus,

Current Assets= 20,000+5,000= Rs 25,000

Current liabilities = 10,000

Gross Working Capital= Total Current Assets = 25,000

Net Working Capital= Current assets- Current Liabilities

                                = Rs25,000 - 10,000

                                =15,000