Answer:
True
Explanation:
The working capital is the difference between the current assets that is used in daily operations e g cash to current liabilities that are to be met in daily operations e g suppliers credit.
It's better kept at ratio 2:1 for the Company to continuously meets his obligations in order to ensure perpetuity.
The working capital of a company should be positive because having positive balance indicates that the firm has enough funds for covering the short-term liabilities when they become due in the next 12 months.
Working capital is calculated by deducting the current liabilities from the current assets, as listed in the company's balance sheet.
[tex]\rm\,Working\,Capital = Current\,Assets - Current\,Liabilities[/tex]
Current assets include cash, account receivables, and other short-term assets. Current debts include accounts payable, taxes, salaries, and interest on the debt. Most analysts estimate the average working capital of any firm should be between 1.5 and 2.
Hence, the statement is true, positive working capital shows the company's financial strength so company prefers positive working capital than negative.
To learn more about working capital. refer to the link:
https://brainly.com/question/5617813
