If a company has current assets of 150,000 and current liabilities of 100,000, what is its working capital?

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Multiple Choice

If a company has current assets of 150,000 and current liabilities of 100,000, what is its working capital?

Explanation:
Working capital is the amount of resources a company has to cover its short-term obligations, calculated as current assets minus current liabilities. Here, 150,000 minus 100,000 equals 50,000, so the company has 50,000 of working capital. This positive figure indicates liquidity to meet day-to-day expenses. The other numbers would come from misinterpreting what working capital represents—for example, using total current assets (150,000) or current liabilities (100,000) alone, or adding them together (250,000), rather than taking their difference.

Working capital is the amount of resources a company has to cover its short-term obligations, calculated as current assets minus current liabilities. Here, 150,000 minus 100,000 equals 50,000, so the company has 50,000 of working capital. This positive figure indicates liquidity to meet day-to-day expenses. The other numbers would come from misinterpreting what working capital represents—for example, using total current assets (150,000) or current liabilities (100,000) alone, or adding them together (250,000), rather than taking their difference.

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