Working capital is calculated by which of the following?
A)Current assets divided by current liabilities.
B)Total assets minus total liabilities.
C)Current assets minus current liabilities.
D)Current assets plus current liabilities.

Question

Quizplus · Accepted Answer

Working capital is calculated by subtracting current liabilities from current assets. This provides a measure of a company's ability to meet its short-term financial obligations. Option A is the formula for the current ratio, option B is the formula for total equity, and option D simply adds together current assets and current liabilities, which does not provide a meaningful measure of working capital.

Working Capital Is Calculated by Which of the Following