Which of the following is NOT a component of working capital?
Practice Questions
1 question
Q1
Which of the following is NOT a component of working capital?
Cash
Accounts Payable
Inventory
Long-term Debt
Long-term Debt is not a component of working capital; it is a long-term liability.
Questions & Step-by-step Solutions
1 item
Q
Q: Which of the following is NOT a component of working capital?
Solution: Long-term Debt is not a component of working capital; it is a long-term liability.
Steps: 5
Step 1: Understand what working capital is. Working capital is the money a company uses for its day-to-day operations.
Step 2: Identify the components of working capital. The main components are current assets (like cash, inventory, and accounts receivable) and current liabilities (like accounts payable).
Step 3: Recognize what long-term debt is. Long-term debt refers to loans or financial obligations that are due in more than one year.
Step 4: Compare long-term debt with working capital components. Since long-term debt is a long-term liability, it does not fit into the short-term focus of working capital.
Step 5: Conclude that long-term debt is NOT a component of working capital.
