An increase in current assets increases net working capital, thereby reducing the risk of insolvency.

Name: An increase in current assets increases net working capital, thereby reducing the risk of insolvency.
Brand: Quizplus
Rating: 4.8 (37 reviews)

Question

Quizplus · Accepted Answer

Increasing current assets, such as cash and accounts receivable, will result in an increase in net working capital. This increase in net working capital can improve a company's ability to meet its short-term obligations and reduce the risk of insolvency. Therefore, the statement is true.

An Increase in Current Assets Increases Net Working Capital, Thereby