Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 5 - Balance Sheet and Statement of Cash Flows - Review and Practice - Questions - Page 237: 14


Affirmatively, a working capital can be alluded as the excess of the total current assets over the total current liabilities and many are the times when this excess is referred to as the working capital. Working capital represents the net amount of a company's relatively liquid resources; that is, it is the liquidity buffer available to meet the financial demands of a company's operating cycle.

Work Step by Step

Alternatively, working capital can also be viewed as to what a business uses in its day-to-day trading operations and which is calculated as: current assets-current liabilities.
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