By comparing a firm's current assets and current liabilities,one can assess whether the firm has sufficient ________ to meet its ________ needs.
A) long-term capital; short-term
B) working capital; short-term
C) working capital; long-term
D) marketable securities; long-term

Question

Quizplus · Accepted Answer

Working capital is the difference between current assets and current liabilities, which represents the funds available to a firm to cover its short-term operational needs. Therefore, by comparing current assets and current liabilities, one can assess whether a firm has sufficient working capital to meet its short-term needs. Choice A is incorrect because long-term capital is not relevant to assess short-term needs. Choice C is incorrect because working capital does not relate to long-term needs. Choice D is incorrect because marketable securities are just one type of current asset, and the question asks for a general assessment of current assets.

By Comparing a Firm's Current Assets and Current Liabilities,one Can