Enough working capital is an indicator of which quality of the business?

Correct option is D

Enough working capital means that a business has sufficient current assets to meet its current liabilities comfortably. This directly indicates the liquidity of the business.
Liquidity refers to the firm’s ability to convert assets into cash quickly and to pay short-term obligations on time. Adequate working capital ensures:
· Smooth business operations
· Timely payment to suppliers
· Better creditworthiness
· Ability to handle unexpected expenses
Thus, enough working capital primarily reflects the liquidity position of the business rather than growth or strength.
Therefore, the correct answer is (d) Liquidity.
Information Booster
1. Working capital = Current Assets – Current Liabilities.
2. High working capital = better ability to meet short-term obligations.
3. Liquidity is essential for uninterrupted production and operations.
4. Strong liquidity reduces dependence on short-term borrowing.
5. Excessive working capital, however, may indicate idle funds.
Additional Information
· (a) Weakness: Not correct; adequate working capital shows financial health, not weakness.
· (b) Growth: Growth requires long-term capital investment, not necessarily linked to working capital.
· (c) Strength: Overall strength includes profitability, solvency, stability—not just working capital.