How Is Working Capital Calculated

question 13

Multiple Choice

How is working capital calculated?

• A)(total current assets)minus (total current liabilities)
• B)(total current assets)minus (inventories and prepaid assets)
• C)(total current assets)divided by (total current liabilities)
• D)(total current assets)
• E)(total current liabilities)

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Definitions:

C Rating

A rating given to a security indicating significant risk; it's one of the lower ratings in the grading scale of investments.

Catastrophe Bonds

Insurance-linked securities issued by insurance companies to transfer major risks from the issuer to investors, typically used for natural disaster risks.

Asset-Backed Bonds

Bonds that are secured by a pool of assets, such as loans or receivables, which generate the cash flow to pay bondholders.

TIPS

Treasury Inflation-Protected Securities, a type of U.S. Treasury bond designed to help investors protect against inflation.