Cutting working capital can increase company earnings.

Name: Cutting working capital can increase company earnings.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

If a company reduces its working capital (current assets minus current liabilities), it can free up extra cash that can be used for other purposes, such as investing in new projects, paying off debt, or returning money to shareholders. This can increase earnings in the short term, but may not be sustainable over the long term if the company's cash flow situation worsens.

Cutting Working Capital Can Increase Company Earnings