Which items are included in current assets when calculating net working capital?

• A. Land and equipment
• B. Long-term investments
• C. Cash, accounts receivable, and inventory
• D. Intangible assets and goodwill

Answer: (C)

The items included are cash, accounts receivable, and inventory because they are current assets—assets expected to be converted to cash or used up within one year (or one operating cycle). Cash is immediately available, accounts receivable will be collected in the near term, and inventory will be sold or consumed in the near term. These are the components that reflect short-term liquidity used in net working capital.

Land and equipment are long-term (non-current) assets, not part of current assets. Long-term investments, as well as intangible assets and goodwill, are also non-current assets. Including them would not reflect short-term liquidity, which is what net working capital measures.