Net Working Capital

question 22

Multiple Choice

Net working capital:

• A)represents the company's ability to pay its long-term debts.
• B)is computed by subtracting total current liabilities from total current assets.
• C)should be a negative number to ensure the profitability of the company.
• D)should be the same for all companies.

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Definitions:

Marginal Damage Cost

The additional cost associated with producing one more unit of a good or service, considering the negative externalities.

Efficient Amount

This refers to the quantity of a good or service that maximizes social welfare, where the marginal benefit to consumers equals the marginal cost of production.

Marginal Benefit

The incremental benefit or pleasure derived from consuming one more unit of a good or service.

Efficient Level

The level of output where a firm or economy is maximizing its productivity and minimizing waste within its resources.