Working capital equals current assets less current liabilities. Identify and describe factors impairing the usefulness of working capital as an analysis measure.
Answer to relevant QuestionsAre fixed assets potentially includable in current assets? Explain. If your answer is yes, describe situations where inclusion is possible.What are the limitations of the current ratio as a measure of liquidity?What is window-dressing of current assets and liabilities? How can we recognize whether financial statements are window-dressed? How should we treat deferred income taxes in an analysis of capital structure? Why is the evaluation of asset composition useful for capital structure analysis?
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