A firm starts its year with positive net working capital.During the year,the firm acquires more short-term debt than it does short-term assets.This means that
A)the ending net working capital might be positive,negative,or equal to zero.
B)both accounts receivable and inventory decreased during the year.
C)the beginning current assets were less than the beginning current liabilities.
D)accounts payable increased and inventory decreased during the year.
E)the ending net working capital will be negative.

Question

Quizplus · Accepted Answer

Acquiring more short-term debt than short-term assets means that the firm's current liabilities increased more than its current assets. This does not necessarily mean that the ending net working capital will be negative, as it depends on the specific amounts and changes in both current assets and current liabilities throughout the year. The other answer choices do not accurately reflect the scenario described.

A Firm Starts Its Year with Positive Net Working Capital