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

Introduction / Context: Working capital covers current assets required to operate the plant day-to-day: inventories, receivables, cash, and short-term items. Distinguishing these from fixed assets (plant and equipment) is essential for investment and financing calculations.

Given Data / Assumptions:

• Working capital = current assets needed for operations.
• Fixed capital = long-lived physical assets, installed.
• We must select the item that belongs to fixed capital, not working capital.

Concept / Approach: Inventories (raw, in-process, finished goods) and minimum cash balances are current assets and thus working capital. Storage facilities (tanks, warehouses, silos) are physical structures with multi-year life and are part of fixed capital investment.

Step-by-Step Solution:

Verification / Alternative check: Balance sheets list storage tanks under property, plant, and equipment (PP&E), depreciated over time; inventories and cash appear under current assets.

Why Other Options Are Wrong:

Common Pitfalls: Confusing ‘‘inventory storage’’ (the stock itself) with ‘‘storage facilities’’ (the fixed asset that holds it). Only the stock is working capital.

Final Answer: Storage facilities