5 Questions
What is working capital and what does it represent?
Working capital is a financial metric representing the operating liquidity available to a business, organization, or entity, including governmental entities.
What is the relationship between working capital and fixed assets?
Working capital is considered a part of operating capital, along with fixed assets such as plant and equipment.
How is gross working capital calculated?
Gross working capital is equal to current assets.
What does it mean if an entity has a working capital deficiency?
If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit and negative working capital.
Why is positive working capital necessary for a company?
Positive working capital is required to ensure that a firm is able to continue its operations and has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses.
Test your knowledge about working capital, a financial metric that represents the operating liquidity available to businesses and organizations. Learn about the calculation and significance of working capital in financial management.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
