Accounting for IGCSE & O level - Final Statements (Section 4 - No. 38)
If a business has negative working capital, what does this indicate?
The business has more current assets than current liabilities.
The business has more current liabilities than current assets.
The business has a very high level of liquidity.
The business is highly profitable.
Explication
Negative working capital means that current liabilities exceed current assets.