TABLE 18.1
Use the information to answer the following question(s).
Polaris Corporation Balance Sheet December 31, 20xx

-Refer to Table 18.1.If Polaris increases inventory by $10,000 and A/P also by $10,000,the net change in NWC is ________.
A)$20,000
B)$10,000
C)$0
D)none of the above

Question

TABLE 18.1
Use the information to answer the following question(s).
Polaris Corporation Balance Sheet December 31, 20xx
 
-Refer to Table 18.1.If Polaris increases inventory by $10,000 and A/P also by $10,000,the net change in NWC is ________.
A)$20,000 
B)$10,000 
C)$0 
D)none of the above

Quizplus · Accepted Answer

Net Working Capital (NWC) is calculated as current assets minus current liabilities. An increase in inventory (a current asset) by $10,000 and an increase in accounts payable (a current liability) by $10,000 results in no net change in NWC, as the increase in assets is offset by the increase in liabilities.

TABLE 18.1 Use the Information to Answer the Following Question(s)