A firm with negative net working capital _______________.
A) Is technically bankrupt.
B) Has no cash on hand.
C) Needs to sell some of its inventory to correct the problem.
D) Has more current liabilities than current assets.
E) Most likely will not run short of cash over the next six months.

Question

A firm with negative net working capital  _______________.
A) Is technically bankrupt.
B) Has no cash on hand.
C) Needs to sell some of its inventory to correct the problem.
D) Has more current liabilities than current assets.
E) Most likely will not run short of cash over the next six months.

Quizplus · Accepted Answer

Negative net working capital means that a firm's current liabilities exceed its current assets, indicating a potential liquidity problem, but not necessarily bankruptcy, lack of cash, or the other conditions listed.

A Firm with Negative Net Working Capital _______________