JAMB Commerce 2022 Paper

Concept:Working capital measures a business's short-term financial health by comparing current assets and current liabilities.Explanation:Working capital is calculated using the formula:$$\text{Working capital} = \text{Current assets} - \text{Current liabilities}$$First, add all current assets:$$\text{Debtors} + \text{Cash in hand} + \text{Closing stock} = \$10{,}000 + \$5{,}000 + \$10{,}000$$This gives:$$\text{Current assets} = \$25{,}000$$Next, add all current liabilities:$$\text{Overdraft} + \text{Creditors} = \$8{,}000 + \$12{,}000$$This gives:$$\text{Current liabilities} = \$20{,}000$$Now subtract liabilities from assets:$$\$25{,}000 - \$20{,}000 = \$5{,}000$$Therefore, the working capital is $\$5{,}000$.Answer:C. #5,000.00