What does working capital measure?
A) the excess of a business's assets over its liabilities
B) the excess of a business's current assets over its liabilities
C) the excess of a business's current assets over its current liabilities
D) the excess of a business's net income over its current liabilities

Question

Quizplus · Accepted Answer

Working capital measures the excess of a business's current assets over its current liabilities. Current assets include cash, inventory, and accounts receivable, while current liabilities include bills due and accounts payable. This metric is important because it shows how much capital a business has available to fund its day-to-day operations. Companies with strong working capital are better able to weather financial challenges and pursue growth opportunities.

What Does Working Capital Measure