Series 7: 9.4.1.5.1 Measures Of Short-Term Financial Health

9.4.1.5.1  Measures of Short-Term Financial Health

• • Working capital—current assets minus current liabilities. This is not a ratio but a dollar amount used to assess a company’s ability to meet its short-term commitments. A positive number means the company’s current assets are greater than its current liabilities and that it can likely meet its short-term commitments. A negative number suggests that it cannot. The exam may refer to working capital as net current assets.
• • Current