Which of the following items is included in working capital?

Working capital refers to the funds available to meet a company's short-term obligations and is calculated as current assets minus current liabilities. One key component of working capital is inventory or stock, as it represents goods that are held for production or sale and are expected to be converted into cash within a year.

Including inventory in working capital is essential because it directly affects the company’s liquidity; if a company has a significant amount of inventory but can’t sell it quickly, it may face cash flow problems. This highlights the importance of managing inventory effectively to ensure the company can meet its operational expenses and current liabilities.

Long-term investments, fixed assets, and goods in transit do not represent current assets. Long-term investments are meant for a longer time horizon, fixed assets are non-current (like property and machinery), and goods in transit are often not ready for sale and can be classified differently in accounting terms. Hence, focusing on inventory reflects the essence of working capital as it is directly tied to the operational efficiency and short-term financial health of the business.