Which one of the following statements concerning net working capital is correct?
A) Net working capital increases when inventory is purchased with cash.
B) Net working capital excludes inventory.
C) Total assets must increase if net working capital increases.
D) Net working capital may be a negative value.
E) Net working capital is the amount of cash a firm currently has available for spending.

Question

Quizplus · Accepted Answer

Net working capital is calculated by subtracting current liabilities from current assets. If the current assets are less than the current liabilities, net working capital is negative.

Which One of the Following Statements Concerning Net Working Capital