What does an amount of $60,400 represent if current assets are $87,600 and current liabilities are $27,200?

The amount of $60,400 represents working capital, which is a financial metric used to assess a company's operational efficiency and short-term financial health. Working capital is calculated by subtracting current liabilities from current assets.

In this scenario, current assets total $87,600, and current liabilities amount to $27,200. By performing the calculation:

$87,600 (current assets) - $27,200 (current liabilities) = $60,400 (working capital)

This calculation indicates that the company has sufficient current assets exceeding its current liabilities, which is a positive indicator that it can cover its short-term obligations.

Working capital is crucial for a company as it provides insight into its liquidity and operational effectiveness. A positive working capital figure suggests that the company can fund its day-to-day operations and invest in future growth, making it a key aspect of financial management.

In this context, the other choices do not accurately represent the computed figure. For instance, net equity would involve total assets minus total liabilities rather than just current assets and liabilities. Profit refers to revenue minus expenses, which is not represented by the provided equation. Total assets account for all resources owned by the company, exceeding just the current assets. Thus, working capital is the most