A Small Company Has Current Assets of $1 112 000

question 59

Multiple Choice

A small company has current assets of $1 112 000 and current liabilities of $717 000. Which of the following statements about that company is most likely to be true?

• A)Since net working capital is nearly zero, the company is well run and will have little difficulty attracting investors.
• B)Since net working capital is negative, the company will not have enough funds to meet its obligations.
• C)Since net working capital is high, the company will likely have little difficulty meeting its obligations.
• D)Since net working capital is very high, the company will have ample money to invest after it meets its obligations.

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Definitions:

Cohabitation

An arrangement in which a couple lives together in a committed romantic relationship but are not formally married.

Committed Romantic Relationship

A relationship marked by emotional and usually sexual fidelity, loyalty, and mutual support between partners.

Chronological Age

The actual age of a person measured in years from the date of birth, often used as a general indicator of development and aging.

Cognitive Transitions

Changes in cognitive functions or processes that occur during development, notably seen during adolescence.