What defines the financial health of a company in the context of working capital?

The financial health of a company, especially in the context of working capital, is best defined by assets minus liabilities. Working capital specifically refers to the difference between current assets and current liabilities, which provides insights into the short-term financial health and operational efficiency of the business. It indicates the liquidity of the company, showing whether it has enough assets on hand to meet its short-term obligations. A positive working capital signifies that a company can cover its short-term debts and invest in its operations and growth, while a negative figure may indicate potential financial difficulties.

Other options, such as total income, net profits, and monthly expenses, do not directly address the specific measure of working capital. Total income reflects the revenue generated by a company, which can indicate overall business performance but does not specifically address the liquidity position. Net profits provide insight into a company's profitability over a given period, but like total income, does not give a clear picture of short-term financial stability. Monthly expenses, while important for budgeting and financial planning, do not represent the actual financial health in terms of the balance between current assets and liabilities. Therefore, focusing on the difference between assets and liabilities gives the clearest measure of a company's working capital and its overall financial health.