What Is the Formula for Measuring a Firm's Working Capital

question 36

Multiple Choice

What is the formula for measuring a firm's working capital?

• A) current assets = working capital /current liabilities
• B) working capital = current assets - current liabilities
• C) current liabilities = current assets + working capital
• D) working capital = current assets x current liabilities
• E) current liabilities = current assets / working capital

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Definitions:

Harvest Strategy

A business approach focused on extracting maximum profits from a product, division, or business segment with minimal investment.

Retrenchment Strategy

A strategy used by businesses to reduce their size or operations in response to economic challenges or poor performance in order to become more financially stable.

Restructure

The process of changing the organizational, ownership, or operational structure of a company to make it more profitable, efficient, or to adapt to new conditions.

Competitive Advantage

The distinctive qualities or situations that enable a company to surpass its rivals in performance.