Utah General Contractors - Business and Law Practice Exam

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Prepare for the Utah General Contractors Business and Law Exam with comprehensive study materials, including detailed quizzes and essential practice questions. Gain confidence and knowledge for a successful exam day!

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If a company's current assets are $100,000 and total liabilities are $50,000, what is its net working capital?

$25,000
$50,000
$75,000
$100,000

The correct answer is: $50,000

To determine a company's net working capital, you subtract total liabilities from current assets. In this case, the company's current assets amount to $100,000, while its total liabilities are $50,000. The formula for net working capital is: Net Working Capital = Current Assets - Total Liabilities Applying the values: Net Working Capital = $100,000 - $50,000 = $50,000 This implies that the company has $50,000 available to cover its short-term obligations, indicating a potentially healthy liquidity position. This amount reflects the capital that can be used in day-to-day operations, investments, or to ensure financial stability during downturns. The incorrect options arise from misunderstandings of either the formula or the values involved. Some options may reflect additional calculations or misinterpretations of net working capital's purpose, but the essential calculation leads clearly to the correct answer, reaffirming the company's favorable financial standing.