Which One of the Following Statements Concerning Net Working Capital

question 27

Multiple Choice

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

• A)The lower the value of net working capital the greater the ability of a firm to meet its current obligations.
• B)An increase in net working capital must also increase current assets.
• C)Net working capital increases when inventory is sold for cash at a profit.
• D)Firms with equal amounts of net working capital are also equally liquid.
• E)Net working capital is a part of the operating cash flow.

---

Definitions:

Franchise System

A method of distributing products or services involving a franchisor, who establishes the brand's trademark or business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.

Channel Conflict

A situation where there is discord or competition among channel partners such as manufacturers, wholesalers, and retailers, often due to overlapping territories or conflicting interests.

Channel Member

A participant in the marketing channel, such as a retailer or distributor, through which goods and services flow from producers to consumers.

Channel Circumvention

A distribution strategy where a producer sells their products directly to consumers, bypassing intermediary levels of distribution.