Working capital indicates:
A) the ability a company has to fund innovation.
B) the ability a company has to multiply its profits within a short time.
C) the ability a company has to lower its variable costs of production.
D) the ability a company has to pay its current liabilities.

Question

Quizplus · Accepted Answer

Working capital is the amount of funds a company has available to fund its day-to-day operations and meet its short-term financial obligations, including paying its current liabilities. It is a measure of a company's liquidity and ability to manage its cash flow. Therefore, the best alternative is D, since it refers to the ability to pay current liabilities.

Working Capital Indicates