Which One of the Following Will Decrease the Net Working

question 59

Multiple Choice

Which one of the following will decrease the net working capital of a firm? Assume the current ratio is greater than 1.0.

• A)selling inventory at cost
• B)collecting payment from a customer
• C)paying a payment on a long-term debt
• D)selling a fixed asset for book value
• E)paying a supplier for the purchase of an inventory item

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Definitions:

Break-even Point

The level of production or sales at which total costs equal total revenue, meaning the business neither makes a profit nor a loss.

Sales Mix

The combination of products and services sold by a company, significantly impacting its overall profitability and performance.

Degree of Operating Leverage

A ratio that measures the sensitivity of a company's operating income to its sales, indicating how revenue growth translates to growth in operating income.

Degree of Operating Leverage

A financial metric that measures the sensitivity of a company's operating income to its sales volume.