Which one of the following will decrease a firm's net working capital?
A) an increase in the cash account balance
B) the payment of a receivable by a customer
C) the purchase of a fixed asset using short-term debt
D) the acquisition of a building using long-term debt
E) the sale of inventory for cash

Question

Quizplus · Accepted Answer

Net working capital is calculated as current assets minus current liabilities. The purchase of a fixed asset using short-term debt increases current liabilities without increasing current assets, thus decreasing net working capital.

Which One of the Following Will Decrease a Firm's Net