Working Capital Quiz
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Questions and Answers

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?

  • 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?

  • High profitability
  • Low asset value
  • Excess working capital
  • Negative working capital (correct)

    • Why is positive working capital important for a firm?

    <p>To continue operations and satisfy short-term debt</p> Signup and view all the answers

    What does the management of working capital involve?

    <p>Managing inventories and accounts receivable</p> Signup and view all the answers

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