Venus Limited has current assets of $50 million, current liabilities of $30 million, inventory of $20 million, cash of $5 million and total assets of $200 million. Calculate net working capital.

Question

BlackTom AI · Accepted Answer

To determine net working capital, start by identifying the components involved: net working capital = current assets minus current liabilities.
Current assets are given as 50 million dollars, and current liabilities are 30 million dollars. Subtracting the liabilities from the assets yields 50 million – 30 million = 20 million.
The inventory and cash figures are elements of the current assets, so they’re already encompassed within the 50 million current assets total. The total assets figure (200 million) is not used in calculating net working capital, since NWC focuses strictly on the short-term liquidity balance between what the company owns in the near term and what it owes in the near term.
Therefore, the calculated net working capital is 20 million dollars, which corresponds to the provided option.

25400 Financial Literacy - Spring 2025 🔴 Practice Questions for In-class Quiz 2

Venus Limited has current assets of $50 million, current liabilities of $30 million, inventory of $20 million, cash of $5 million and total assets of $200 million. Calculate net working capital.

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