Yukon Company has total current liabilities equal to $600,000 and working capital of $30,000. Northwest Company has the same amount of working capital, but it has total current liabilities of $40,000. The company with the better working capital position:
A)is Northwest Company.
B)is Yukon Company.
C)is neither Northwest nor Yukon. They both have exactly the same working capital position.
D)cannot be determined from the information given.

Question

Quizplus · Accepted Answer

Yukon Company has lower working capital ($30,000) compared to Northwest Company (also $30,000) but has higher current liabilities ($600,000) compared to Northwest Company ($40,000). This means that Yukon Company has less liquidity and a weaker working capital position compared to Northwest Company. Therefore, Northwest Company has the better working capital position.

Yukon Company Has Total Current Liabilities Equal to $600,000 and Working