Gross working capital represents the total investment in which of the following assets?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Current Assets.
Gross working capital represents the total investment in Current Assets.
Gross working capital refers to the total value of a company's current assets. These are assets that can be converted into cash within a year or less. Examples of current assets include:
- Cash and cash equivalents
- Accounts receivable (money owed by customers)
- Inventory (goods for sale)
- Short-term investments
Fixed assets, tangible assets, and intangible assets are not included in gross working capital.
- Fixed assets are long-term investments that are not easily converted to cash, like buildings, machinery, and equipment.
- Tangible assets are physical assets that can be seen and touched, including both current and fixed assets.
- Intangible assets are non-physical assets like intellectual property, brand recognition, and goodwill.