The correct answer is D. Working capital.
Working capital is a measure of a company’s liquidity and efficiency. It is calculated by subtracting current liabilities from current assets. Current assets are assets that are expected to be converted into cash within one year, such as cash, accounts receivable, and inventory. Current liabilities are liabilities that are due within one year, such as accounts payable and short-term debt.
A positive working capital indicates that a company has enough current assets to cover its current liabilities. This is a good sign, as it means that the company is able to meet its short-term obligations. A negative working capital indicates that a company has more current liabilities than current assets. This is a bad sign, as it means that the company may not be able to meet its short-term obligations.
Working capital is an important measure of a company’s financial health. It is used by investors, creditors, and other stakeholders to assess a company’s ability to meet its short-term obligations.
Here is a brief explanation of each option:
- A. Capital + Liabilities = assets. This is not the correct answer. Capital is a company’s equity, which is the difference between its assets and liabilities. Liabilities are a company’s debts. Assets are a company’s resources.
- B. Absorbed capital. This is not the correct answer. Absorbed capital is a term used in economics to describe the amount of capital that is used to produce goods and services.
- C. Net assets. This is not the correct answer. Net assets is a company’s total assets minus its total liabilities.
- D. Working capital. This is the correct answer. Working capital is a measure of a company’s liquidity and efficiency. It is calculated by subtracting current liabilities from current assets.