A firm is considering a project which would increase accounts receivable by $10,000, accounts payable by $35,000, and inventory by $30,001. Which of the following is true?

Question

Quizplus · Accepted Answer

Net working capital is calculated as current assets minus current liabilities. The increase in accounts receivable and inventory increases current assets by $40,001, while the increase in accounts payable increases current liabilities by $35,000. Therefore, net working capital increases by $5,001.

A Firm Is Considering a Project Which Would Increase Accounts