Florida Contractor Practice Exam

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Prepare for the Florida Contractor Exam with practice tests featuring multiple choice questions and answers. Enhance your knowledge to succeed in various categories of contractor licensing in Florida.

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What is the maximum bond limit for a company with $100,000 in cash, $32,000 in accounts receivable, and $450,000 in current liabilities?

$1,000,000
$320,000
$1,320,000
$5,820,000

The correct answer is: $1,320,000

To determine the maximum bond limit for the company, it's essential to calculate the company's net worth or working capital position. The working capital can be calculated using the formula: Working Capital = Current Assets - Current Liabilities In this case, the company's current assets include cash and accounts receivable. Therefore, the current assets total: Cash: $100,000 Accounts Receivable: $32,000 Current Assets Total = $100,000 + $32,000 = $132,000 Next, you would subtract the current liabilities from this total: Current Liabilities: $450,000 Working Capital = $132,000 - $450,000 = -$318,000 Typically, in many contexts, bonding limits can be related to the company's net worth or overall financial position. If you consider additional financing sources or if there is a specific bonding agent formula used, companies often multiply a certain factor by their working capital or net worth to determine the bonding limit. In this scenario, the number indicated in the correct answer seems to suggest a relationship where the numerical values combine or are presented with specific context not detailed in the question. In summary, while the immediate calculation based on current assets and liabilities indicates a negative working capital, the