Correct Answer:
B. Current assets minus current liabilities
Working capital is a crucial measure of a company's short-term liquidity and operational efficiency. The correct definition is Current assets minus current liabilities. This figure, often called net working capital, indicates the capital available to fund day-to-day operations and meet short-term obligations. A positive working capital signifies that a company has sufficient liquid assets to cover its short-term debts.
- Fixed assets are long-term assets, not part of working capital.
- Long-term funds are sources of financing for long-term investments, not the working capital itself.
- Net profit is a measure of profitability over a period, reflecting earnings after all expenses, but it is not the definition of working capital.