What is the formula for working capital requirement?

The correct formula for working capital requirement is determined by understanding the components involved in calculating working capital. Working capital is defined as the difference between current assets and current liabilities.

To assess the working capital requirement specifically, one typically focuses on the current operational assets that are necessary for day-to-day operations. This involves analyzing current assets, particularly excluding certain components like inventory, which may not always be immediately liquid or necessary for daily operations.

Thus, the formula looks at the adjusted current assets (excluding inventory) subtracted by current liabilities, which gives an indication of the net current assets needed to fund operations. This approach sheds light on how much working capital is actually required to maintain operations without counting the variability often associated with inventory levels.

In contrast, the other options either incorrectly incorporate inventory or do not correctly subtract current liabilities in a way that reflects the true requirement of working capital.