Question

Gross working capital means the same thing as :
1. Total assets
2. Fixed assets
3. Current assets
4. Current assets - current liabilities

Answer 1

Correct Answer - Option 3 : Current assets

The Correct Answer is Current assets.

• Gross working capital is the sum of a company's Current assets (assets that are convertible to cash within a year or less).
• Gross working capital includes assets such as cash, accounts receivable, inventory, short-term investments, and marketable securities.
• Gross working capital less current liabilities is equal to net working capital, or simply working capital a more useful measure for balance sheet analysis. 

• Gross working capital is the total value of a company's Current assets.
• Accounts receivable, inventory, and marketable securities are all examples of gross working capital.
• On its own, gross working capital is not useful, as it does not give a full picture of a company's liquidity.
• Including current liabilities into the equation results in calculating working capital, which is a true picture of a company's liquidity and its ability to meet its short-term obligations.

Fixed Assets :

• Fixed assets are long-term assets that a company has purchased and is using for the production of its goods and services.
• Fixed assets are noncurrent assets, meaning the assets have a useful life of more than one year. Fixed assets include property, plant, and equipment (PP&E) and are recorded on the balance sheet.

Current Assets :

• Current assets are all the assets of a company that are expected to be sold or used as a result of standard business operations over the next year.
• Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.