All else equal, a ﬁrm can increase its net working capital by:
A)increasing its tangible non-current assets.
B)increasing shareholders' equity.
C)decreasing current assets.
D)decreasing current liabilities.
E)None of the above.

Question

Quizplus · Accepted Answer

Decreasing current liabilities would increase the firm's net working capital. Net working capital is calculated as current assets minus current liabilities, so reducing current liabilities would increase the overall amount of net working capital.

All Else Equal, a ﬁRm Can Increase Its Net Working