Question

The same hospital has $40 million in current assets and $30 million in current liabilities. During a 30 - day month, it incurred total operating expenses of $10 million. How many days of working capital did it maintain this period

Answer 1

`Days\ of\ working\ Capital= 30\ days`

During a 30 - day month,days of working capital are 30 days.

Explanation:

Formula for days of working capital we are going to us is:

`Days\ of\ working\ Capital=(Current\ Assets\ -Current\ Liabilities) / (Operation\ Expense)/(Time Period)`In our case:

Current Assets= $40 million.

Current liabilities=$30 million.

Operation Expense= $10 million.

Time Period=30 days Month.

`Days\ of\ working\ Capital=(\$40\ million-\$30\ million)/((\$10 million)/(30)) \\Days\ of\ working\ Capital= 30\ days`

During a 30 - day month,days of working capital are 30 days.