Correct Answer:
C. Machinery
Working capital is the difference between current assets and current liabilities, representing the capital available to a business for its day-to-day operations. It indicates a company's short-term liquidity.
- Machinery is not part of working capital. Machinery is a fixed asset, meaning it is a long-term asset used in production for more than one accounting period. Fixed assets are part of a company's long-term investment strategy, not its short-term operational liquidity.
- Cash (A) is a current asset, essential for daily operations and a key component of working capital.
- Inventory (B) consists of raw materials, work-in-progress, and finished goods, all considered current assets.
- Receivables (D), or accounts receivable, are amounts owed to the company by customers for goods or services delivered, expected to be collected within a year, making them current assets.
Therefore, machinery's long-term nature excludes it from working capital calculations.