BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Detailed explanation-1: -When a company has more current assets than current liabilities, it has positive working capital. Having enough working capital ensures that a company can fully cover its short-term liabilities as they come due in the next twelve months. This is a sign of a company’s financial strength.
Detailed explanation-2: -Answer and Explanation: It is true that working capital is the excess of current assets over current liabilities.
Detailed explanation-3: -Working capital is the amount of current assets that’s left over after subtracting current liabilities. It’s what can quickly be converted to cash to pay short-term debts. Working capital can be a barometer for a company’s short-term liquidity. A positive amount of working capital indicates good short-term health.
Detailed explanation-4: -Calculation. Working capital is the difference between current assets and current liabilities.