Answer (A) is correct . Net working capital is defined by accountants as the difference between current assets and current liabilities. Working capital is a measure of short-term solvency.
Answer (B) is incorrect because Working capital refers to the difference between current assets and current liabilities; fixed assets are not a component.
Answer (C) is incorrect because Total assets and total liabilities are not components of working capital; only current items are included.
Answer (D) is incorrect because Shareholders’ equity is not a component of working capital; only current items are included in the concept of working capital.
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