True or False: Companies prefer that their working capital is a positive amount rather than a...

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True or False: Companies prefer that their working capital is a positive amount rather than a negative amount. Select one: O

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Answer 1

Answer #1

Solution:

Working capital is the difference between current assets and current liabilities. It represents the liquidity of the company and ability of the company to pay its current liabilities in near term.

Negative working capital is not a good sign for the company, It means current liabilities are higher than current assets resulting in current ratio to be lesser than 1.

Therefore companies prefer that their working capital is a positive amount rather than a negative amount.

The statement holds true.

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Answer 2

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Add Answer to: True or False: Companies prefer that their working capital is a positive amount rather than a...

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