A company with working capital of $600,000 and a current ratio of 3.25 pays a $200,000 short-term liability.The amount of working capital immediately after payment is:
A) $400,000.
B) $800,000.
C) $600,000.
D) $200,000.

Question

Quizplus · Accepted Answer

The working capital remains $600,000 after paying a $200,000 short-term liability because working capital is calculated as current assets minus current liabilities. Paying off $200,000 of liabilities also reduces current assets by $200,000, leaving the working capital unchanged.

A Company with Working Capital of $600,000 and a Current