A Firm Has Current Assets of $10,000 and Current Liabilities

question 47

Multiple Choice

A firm has current assets of $10,000 and current liabilities of $6,000. Cash and marketable securities total $4,000, the balance in accounts receivable is $2,000, and the book value of inventory is $4,000. The firm's net working capital is:

• A)$2,000.
• B)$4,000.
• C)$6,000.
• D)$9,000.
• E)None of the above

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Definitions:

Minimum Required Rate Of Return

The lowest acceptable return on an investment, used as a benchmark for evaluating potential investments.

Average Operating Assets

This refers to the average value of the assets used in operations over a certain period, which can indicate the efficiency of asset use in generating income.

Sales

The revenue generated from the selling of goods or services by a company or an enterprise to its customers.

Turnover

Sales divided by average operating assets.