Which One of the Following Statements Concerning Net Working Capital

question 252

Multiple Choice

Which one of the following statements concerning net working capital is correct?

• A) The greater the net working capital, the greater the ability of a firm to meet its short-term obligations.
• B) The change in net working capital is equal to current assets minus current liabilities.
• C) Depreciation must be added back to current assets when computing the change in net working capital.
• D) Net working capital is equal to long-term assets minus long-term liabilities.
• E) Net working capital is a part of the operating cash flow.

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Definitions:

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