Working Capital Worksheet

What is the definition of working capital?

• Total assets minus total liabilities

• Current assets minus current liabilities

• Total revenue in a year

• Total equity of the company

If a company has current assets of 400.000 and current liabilities of 250.000, what is the working capital?

• $150,000

• $650,000

• $250,000

• $400,000

Which of the following is a current asset?

• Machinery

• Accounts receivable

• Bonds payable

• Long-term loan

Which of the following is a current liability?

• Inventory

• Accounts payable

• Patents

• Land

Why is working capital important?

• It determines the company’s long-term investments

• It shows the company’s ability to pay short-term obligations

• It measures the company’s total market value

• It reflects the company’s total revenue

A company with negative working capital may face:

• High profitability

• Liquidity problems

• Strong cash flow

• Excess inventory

Which of the following is a component of working capital?

• Property, plant, and equipment

• Accounts receivable

• Long-term bonds

• Shareholder’s equity

Which ratio directly relates to working capital management?

• Current ratio

• Debt-to-equity ratio

• Gross profit margin

• Return on equity