Working capital:
A) Pays for long-term investments in fixed assets.
B) May be used to pay for new production facilities.
C) Pays for short-term expenses.
D) Is not needed on an ongoing basis.
E) None of the above.

Question

Quizplus · Accepted Answer

Working capital is the amount of funds a company has available to cover its day-to-day expenses, such as paying bills and meeting payroll. It is used to finance short-term operating needs such as inventory, accounts receivable, and operating expenses. Therefore, it pays for short-term expenses, which is option C.

Working Capital