Which of the Following Actions Will Cause a Firm's Net

question 116

Multiple Choice

Which of the following actions will cause a firm's net working capital to increase?

• A) The firm uses more trade credit.
• B) The firm increases its inventory in anticipation of seasonal sales.
• C) The firm pays off a short-term bank loan with cash.
• D) All of these choices are correct.

---

Definitions:

Contributed Capital

Funds that shareholders provide to a company in exchange for shares of stock, representing the equity investment in the company.

Equity

The amount of money that would be returned to shareholders if all of the assets were liquidated and all the company's debts were paid off.

Capital Stock

The total amount of shares that a company can issue as authorized by its corporate charter, representing ownership in the company.