Which one of these best describes the relationship between net working capital (NWC)and sales?

Question

Quizplus · Accepted Answer

Net working capital (NWC) changes in direct relation to sales, but the change may be less than proportional with sales. As sales increase, a company may need to invest more in inventory, accounts receivable, and prepayments, which would increase NWC. However, some of these investments may not increase proportionally with sales, leading to a less than proportional change in NWC. Similarly, if sales decrease, a company may be able to reduce its investment in these areas, leading to a decrease in NWC.

Which One of These Best Describes the Relationship Between Net