Question

Jones Corp. reported current assets of $199,000 and current liabilities of $140,000 on its most recent balance sheet. The working capital is:______a. 142%.b. 70%.c. ($59,000).d. $59,000.e. 42%.

Answer 1

It is $59,000(D)

Step-by-step explanation:

Net Working Capital = Current Assets – Current Liabilities

=$199,000-$140,000

=$59,000

Working Capital is the money available to fund a company’s day-to-day operations.

If the current assets are greater than current liabilities, we have positive net working capital and vice-versa.

Option (A) False. This is working capital percentage -i.e [(current assets/Current Liabilities) *100%]

Option(B) False.

Option(C) False. Net working capital will only be negative when current liabilities are greater than current assets.

Option(D) True.

Option(E) False