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Working Capital and Liquidity (Topic Outline)


Topic Outline

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Read our Explanation (7 Parts) Free

Our Explanation of Working Capital and Liquidity provides you with an in-depth look at the components of working capital and the challenges of converting current assets to cash before obligations come due. You will see how the statement of cash flows can assist you in understanding and managing a company’s liquidity.

Part 1Introduction to Working Capital and Liquidity; Components of Working Capital
Part 2Reporting Working Capital, Current Assets, Current Liabilities; Accrual Method of Accounting; Changes in the Amount of Working Capital
Part 3Liquidity; Working Capital Ratios
Part 4Accounts Receivable: Turnover, Other
Part 5Inventory: Turnover (Average and by Item)
Part 6Accounts Payable; Business Credit Card, Statement of Cash Flows
Part 7Reasons Why Liquidity Will Decrease; Reasons Why Liquidity Will Increase
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Solve our Word Scramble Free

If you find Working Capital and Liquidity terminology to be difficult, this Word Scramble will provide clues (scrambled answers) to assist you.

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We created this crossword puzzle for you to learn, review, and retain terminology for the topic Working Capital and Liquidity in a more fun format.

Review our Cheat Sheet

Our Working Capital and Liquidity Cheat Sheet highlights the components of working capital and the financial ratios associated with accounts receivable and inventory. It also summarizes the reasons for a company’s liquidity to increase or decrease and how the changes are presented in the statement of cash flows.

Take our Quick Test #1

This graded 25-question test measures your understanding of the topic Working Capital and Liquidity. Discover which topics you need to study further as you also enhance your long-term retention. All of our quick tests can be taken online and/or printed.

Take our Quick Test #2 with Coaching

This graded 20-question provides coaching to guide you to the correct answers. Use our coaching to learn the WHY behind each answer and deepen your understanding of the topic Working Capital and Liquidity.

Earn our Working Capital and Liquidity Certificate of Achievement

Earning this certificate will show that you understand the need for managing working capital and why company owners often proclaim, “Cash is king”. Studying and reviewing our related materials will allow you to become more astute about changes in a company’s working capital and the importance of the speed in which current assets are converted to cash. You will also see the importance of the liquidity information contained in the statement of cash flows.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on

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