What is the farm's working capital?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $9.99Unlock all

Prepare for the Farm Business Management Exam. Access various study tools like multiple choice questions and flashcards, each with valuable explanations and tips. Ensure you're ready for your assessment!

Multiple Choice

What is the farm's working capital?

Explanation:
Working capital measures the farm’s day-to-day liquidity. It’s the amount left after paying short-term obligations, calculated as current assets minus current liabilities. In this scenario, the balance sheet shows that current assets exceed current liabilities by 197,854, so the farm’s working capital is 197,854. A positive figure like this indicates the farm has liquidity to cover its short-term needs. If liabilities were higher than assets, the working capital would be negative, signaling potential liquidity issues.

Working capital measures the farm’s day-to-day liquidity. It’s the amount left after paying short-term obligations, calculated as current assets minus current liabilities. In this scenario, the balance sheet shows that current assets exceed current liabilities by 197,854, so the farm’s working capital is 197,854. A positive figure like this indicates the farm has liquidity to cover its short-term needs. If liabilities were higher than assets, the working capital would be negative, signaling potential liquidity issues.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy