Which of the Following Statements About Net Working Capital (NWC)

question 76

Multiple Choice

Which of the following statements about net working capital (NWC) is correct?

• A) NWC is positive for all firms.
• B) As NWC decreases, potential liquidity increases.
• C) NWC excludes inventory, which is deemed illiquid.
• D)Decreases in NWC can increase the firm's risk.

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Definitions:

Current Flow

The movement of electric charge through a conductor, typically measured in amperes, integral to the operation of electronic devices and circuits.

Peak Torque

The maximum torque output of an engine or motor, representing the highest level of twisting force it can produce.

Stall RPM

The engine speed at which the torque converter or other coupling device can no longer transfer power to the drivetrain, causing the engine to stop or stall under load.

Cranking Motor RPM

The speed, measured in revolutions per minute, at which a starter motor turns the engine during the starting process.