Which of the Following Statements Is Correct

question 1

Multiple Choice

Which of the following statements is correct?

• A)A decrease in NWC involves either a reduction in current assets, which generates cash, or an increase in current liabilities, thereby freeing up the shareholder's cash for other things.
• B)A decrease in NWC involves either an increase in current assets, which generates cash, or a decrease in current liabilities, thereby freeing up the shareholder's cash for other things.
• C)An example of an increase in a net working capital is to buy more machines or another plant.
• D)None of the statements are correct.

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Definitions:

Employee Turnover

The rate at which employees leave a company and are replaced by new employees, indicating the stability and retention capacity of a workplace.

Measurement Date

The specific point in time at which the value of an asset or liability is determined for accounting purposes.

Intrinsic Value Method

A valuation technique which determines the underlying worth of an asset based on its perceived or calculated true value, rather than its current market price or book value.

Option Price

The price at which the holder of an option contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset or security.