Which of the following actions will result in an increase in NWC?
A)an increase in A/P that exceeds an increase in A/R
B)a reduction in inventory
C)a reduction in A/P plus a smaller reduction in A/R
D)an increase in A/P and a smaller reduction in inventory

Question

Quizplus · Accepted Answer

A reduction in A/P (liabilities) and a smaller reduction in A/R (assets) will increase net working capital (NWC), as the decrease in liabilities outweighs the decrease in assets.

Which of the Following Actions Will Result in an Increase