Holding all other variables constant, which of the following would DECREASE the Net Working Capital investment required on a project?
A)Allowing customers a shorter time to pay for purchases
B)Taking a longer time to pay suppliers
C)Reducing inventory levels
D)Both a & c
E)All of the above

Question

Quizplus · Accepted Answer

Net Working Capital (NWC) is calculated as Current Assets minus Current Liabilities. Decreasing the time customers take to pay (A), taking longer to pay suppliers (B), and reducing inventory levels (C) all effectively reduce the amount tied up in working capital, thus decreasing the NWC investment required.

Holding All Other Variables Constant, Which of the Following Would