The working capital of a company is equal to
A)current assets less current liabilities.
B)total assets less current assets.
C)long-term assets less current assets.
D)stockholders' equity.

Question

Quizplus · Accepted Answer

Working capital is defined as the difference between current assets and current liabilities. Current assets are those that can be easily converted into cash within a year, while current liabilities are debts that are due within a year. Thus, subtracting current liabilities from current assets gives us the working capital, which represents the company's short-term ability to meet its financial obligations.

The Working Capital of a Company Is Equal to