Over the past year, a firm decreased its current assets and increased its current liabilities.As a result, the firm's net working capital:
A)had to increase.
B)had to decrease.
C)remained constant.
D)could have either increased, decreased, or remained constant.
E)was unaffected as the changes occurred in the firm's current accounts.

Question

Quizplus · Accepted Answer

Net working capital is calculated as current assets minus current liabilities. If current assets decrease and current liabilities increase, net working capital will decrease.

Over the Past Year, a Firm Decreased Its Current Assets