Business FinancesQuestion 1205 of 1605
A contractor's current assets are $90,000 and current liabilities are $120,000. His working capital is:
a.$0
b.Negative $30,000
c.$30,000
d.$210,000
Explanation
Working capital = current assets - current liabilities = $90,000 - $120,000 = -$30,000. Negative working capital means short-term debts exceed short-term assets, a sign of possible liquidity trouble.
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