The calculation of working capital is
A)Current assets plus current liabilities.
B)Current assets less current liabilities.
C)Current assets times current liabilities.
D)Current assets divided by current liabilities.

Question

Quizplus · Accepted Answer

Working capital is calculated by subtracting current liabilities from current assets. This is because current assets are the resources that a company can readily convert to cash within one year, while current liabilities are the debts that a company expects to pay within one year. Therefore, subtracting current liabilities from current assets gives us the amount of capital that a company has available for its daily operations.

The Calculation of Working Capital Is