Accounting for IGCSE & O level - Advanced Principles (Section 5 - No. 25)
Which of the following statements is true regarding working capital?
It is the difference between current assets and current liabilities.
It is a measure of a company's short-term liquidity.
It is impacted by transactions that affect only long-term assets.
It should be zero to be successful.
Explanation
Working capital is current assets minus current liabilities, and it provides liquidity.