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

Question

Quizplus · Accepted Answer

Net working capital measures a firm's liquidity and ability to meet short-term obligations. A larger net working capital position indicates that a firm has more current assets (cash, receivables, inventory) than current liabilities (payables, short-term debt), which implies a lower risk of default or bankruptcy. So, option C is the correct answer. Leverage and profitability are measured by other financial ratios.

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