Working capital is
A)calculated by dividing current assets by current liabilities.
B)used to evaluate a company's liquidity and short-term debt-paying ability.
C)used to evaluate a company's solvency and long-term debt-paying ability.
D)calculated by subtracting current liabilities from total assets.

Question

Quizplus · Accepted Answer

Working capital is an indicator of a company's liquidity and its ability to meet short-term obligations with its short-term assets. It is not a measure of solvency or calculated by dividing or subtracting assets and liabilities in the ways described in the other options.

Working Capital Is