Which of the following formulas represents working capital?
A)Current Assets - Current Liabilities
B)Liquid Assets - Liquid Liabilities
C)Current Assets ¸ Current Liabilities
D)Liquid Assets ¸ Liquid Liabilities

Question

Quizplus · Accepted Answer

Working capital is calculated by subtracting current liabilities from current assets. Option A (Current Assets - Current Liabilities) represents this calculation. Option B (Liquid Assets - Liquid Liabilities) is not a correct formula to calculate working capital, as it does not necessarily take into account all current assets and liabilities. Option C (Current Assets ¸ Current Liabilities) is not a correct formula, as it represents the current ratio. Option D (Liquid Assets ¸ Liquid Liabilities) is also not a correct formula, as it represents the quick ratio.

Which of the Following Formulas Represents Working Capital