All of the following will result in an increase in net working capital EXCEPT
A) an increase in inventory.
B) a decrease in accounts payable.
C) an increase in cash.
D) an increase in accruals.

Question

Quizplus · Accepted Answer

Net working capital is calculated as current assets minus current liabilities. An increase in inventory (A) and cash (C) increases current assets, thus increasing net working capital. A decrease in accounts payable (B) decreases current liabilities, also increasing net working capital. However, an increase in accruals (D) increases current liabilities, which would decrease net working capital, not increase it.

All of the Following Will Result in an Increase in Net