A firm's net working capital position is a widely used measure of its ____.

Question

Quizplus · Accepted Answer

Net working capital is the difference between a firm's current assets and current liabilities. It indicates the amount of liquid resources a company has to meet its short-term obligations. A firm with a positive net working capital position is generally considered less risky as it has enough current assets to cover its current liabilities. On the other hand, a negative net working capital position may indicate that a company is struggling to meet its short-term obligations, which could increase its risk profile. Therefore, the best choice is C) risk.

A Firm's Net Working Capital Position Is a Widely Used