Which One of the Following Statements Concerning Net Working Capital

question 65

Multiple Choice

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

• A)Net working capital increases when inventory is purchased with cash.
• B)Net working capital must be a positive value.
• C)Total assets must increase if net working capital increases.
• D)A decrease in the cash balance also decreases net working capital.
• E)Net working capital is the amount of cash a firm currently has available for spending.

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Definitions:

EMH

The Efficient Market Hypothesis, which states that share prices reflect all available information and are thus accurately priced.

Relevant Information

Data or facts that can influence decisions because they are pertinent and directly related to the issue at hand.

Fundamental Analysis

Fundamental analysis involves examining a company's financial statements, health, competitive position, and market trends to gauge its stock's value.

Mispriced Stocks

Stocks whose market prices do not accurately reflect their intrinsic values, potentially due to market inefficiencies or information asymmetry.