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Questions and Answers
What does working capital represent?
What does working capital represent?
- Long-term investments of a business
- Operating liquidity available to a business (correct)
- Total assets of a business
- Fixed assets of a business
How is gross working capital calculated?
How is gross working capital calculated?
- Equal to current assets (correct)
- Current assets minus fixed assets
- Current liabilities minus current assets
- Equal to current liabilities
What does a working capital deficiency indicate?
What does a working capital deficiency indicate?
- High profitability
- Low asset value
- Excess working capital
- Negative working capital (correct)
Why is positive working capital important for a firm?
Why is positive working capital important for a firm?
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What does the management of working capital involve?
What does the management of working capital involve?
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