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What does "working capital" measure? How is it expressed as a formula?

User Melly
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Final answer:

Working capital measures a company's ability to meet its short-term financial obligations. The formula for working capital is: Working Capital = Current Assets - Current Liabilities. For example, if a company has $100,000 in current assets and $50,000 in current liabilities, its working capital would be $50,000.

Step-by-step explanation:

Working capital measures a company's ability to meet its short-term financial obligations. It is calculated by subtracting current liabilities from current assets. The formula for working capital is:

Working Capital = Current Assets - Current Liabilities

For example, if a company has $100,000 in current assets and $50,000 in current liabilities, its working capital would be $50,000.

User Brian Huey
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