Working capital components—identify what is not included Which of the following is not a component of working capital for a process plant?

Introduction / Context:
Working capital is the cash tied up in operating the plant day-to-day. It covers inventories, receivables, and cash balances necessary to meet short-term obligations. Distinguishing working capital from fixed assets avoids mis-sizing funding needs.

Given Data / Assumptions:

• Working capital includes current assets minus current liabilities.
• Inventories include raw materials, work-in-process, and finished goods.
• Transportation facilities refer to trucks, railcars, or pipelines—long-term assets.

Concept / Approach:
Transportation facilities are part of fixed assets (property, plant, and equipment). By contrast, inventories are current assets consumed or sold within the operating cycle. Hence, inventories belong to working capital, but transport facilities do not.

Step-by-Step Solution:

Verification / Alternative check:
Balance sheets show inventories and receivables under current assets; vehicles and pipelines under property, plant, and equipment.

Why Other Options Are Wrong:

• Raw materials in stock: a classic working capital item.
• Finished goods in stock: also a working capital inventory.
• Semi-finished products: WIP inventory, part of working capital.

Common Pitfalls:
Including spare parts stores as working capital without policies; many spares are capitalized or expensed differently—follow accounting standards.

Final Answer:
Transportation facilities