The correct answer is: A. Total Current Assets + Total Current Liabilities
Gross working capital is a measure of a company’s liquidity and efficiency. It is calculated by adding a company’s current assets to its current liabilities. Current assets are assets that are expected to be converted into cash within one year, such as cash, accounts receivable, and inventory. Current liabilities are liabilities that are due within one year, such as accounts payable and short-term debt.
A high gross working capital indicates that a company has a lot of assets that can be converted into cash quickly. This can be a good thing, as it means that the company has a lot of liquidity. However, it can also be a sign that the company is not managing its assets efficiently. A low gross working capital indicates that a company has a lot of liabilities that are due soon. This can be a bad thing, as it means that the company may not be able to pay its bills on time.
It is important to note that gross working capital is just one measure of a company’s liquidity and efficiency. Other measures, such as the quick ratio and the current ratio, should also be considered.
Here is a brief explanation of each option:
- Option A: Total Current Assets + Total Current Liabilities. This is the correct answer. Gross working capital is calculated by adding a company’s current assets to its current liabilities.
- Option B: Total Current Assets – Total Current Liabilities. This is incorrect. Gross working capital is calculated by adding a company’s current assets to its current liabilities, not by subtracting them.
- Option C: Total of Current Assets. This is incorrect. Gross working capital is calculated by adding a company’s current assets to its current liabilities, not by simply taking the total of current assets.
- Option D: None of these. This is incorrect. Option A is the correct answer.