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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

What two measures are used to determine whether a firm has sufficient capital to operate and whether the firm has the ability to pay its debts?

To determine

Indicate the two measures that determine whether the company has the amount of required capital to operate, and whether the company has the capacity to meet it debt obligations.

Explanation

The following are the two measures that determine whether the company has the amount of required capital to operate, and whether the company has the capacity to meet it debt obligations:

  1. 1. Working capital
  2. 2. Current ratio

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital...

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