BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -This is possible if a company’s current assets are fully funded by current liabilities. Having zero working capital, or not taking any long-term capital for short-term uses, potentially increases investment effectiveness, but it also poses significant risks to a company’s financial strength.

Detailed explanation-2: -Working capital = current assets – current liabilities. Net working capital = current assets (minus cash)-current liabilities (minus debt). Operating working capital = current assets – non-operating current assets. Non-cash working capital = (current assets – cash) – current liabilities.

Detailed explanation-3: -Zero working capital is when a company has exactly the same amount of current liabilities as it does current assets. If current obligations exceed current assets, working capital may be negative.

Detailed explanation-4: -The statement is true. Working capital is generally defined as the difference between current assets and current liabilities.

Detailed explanation-5: -The statement is TRUE. An effective working capital manager will ensure that the business has sufficient funds to continue its operation smoothly. Simultaneously, it has to comply with an objective that firm’s assets will generate profits productively and efficiently.