Positive working capital is a guarantee that the company will have adequate cash flow to meet all...

Question:

Positive working capital is a guarantee that the company will have adequate cash flow to meet all cash needs in the coming fiscal year. True or false?

Current Ratio:

Current ratio is a measure of liquidity, short-term liquidity to be particular. It assesses the ratio of the current assets over the current liabilities and evaluates the ability of the firm to pay short-term liabilities.

Answer and Explanation: 1

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Answer: FALSE

Working capital can be computed by obtaining the difference between the current assets and the current liabilities. Current assets...

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What Is Working Capital? - Definition & Formula

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Chapter 8 / Lesson 11
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This lesson explains what working capital is, how it is used in a business, and why businesses need working capital to stay functional. We'll also look at the formula used to calculate working capital.


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