A company that sees a customer pay a $2,500 bill resulting from a previous sale will see no change in its net working capital.

Question

Quizplus · Accepted Answer

Net working capital is the difference between current assets and current liabilities. If a customer pays a bill resulting from a previous sale, the company's cash (current asset) increases, while accounts receivable (current asset) decreases. However, these changes cancel each other out, resulting in no change in net working capital.

A Company That Sees a Customer Pay a $2,500 Bill