Which of the following actions will cause a firm's net working capital to increase?
A)The firm uses more trade credit.
B)The firm increases its inventory in anticipation of seasonal sales.
C)The firm pays off a short-term bank loan with cash.
D)All of the options will cause a firm's net working capital to increase.

Question

Quizplus · Accepted Answer

Increasing inventory will increase the current assets of the firm, while current liabilities remain the same, leading to an increase in net working capital. The other options, using more trade credit or paying off a short-term bank loan with cash, will decrease or have no effect on net working capital, respectively.

Which of the Following Actions Will Cause a Firm's Net