Working capital is the difference between current assets and current liabilities, indicating the availability of funds to meet short-term obligations. Option B represents this calculation accurately. Option A calculates the current ratio, while options C and D include only a subset of current assets, excluding inventory and prepaid expenses.

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Working Capital Is

Question 74

Multiple Choice

Working capital is

A) Current assets divided by current liabilities.
B) Current assets minus current liabilities.
C) Cash,short-term investments,and accounts receivable divided by current liabilities.
D) Cash,short-term investments,and accounts receivable minus current liabilities.

Correct Answer: