The Change in Net Working Capital When Evaluating a Capital

question 81

Multiple Choice

The change in net working capital when evaluating a capital budgeting decision is ________.

• A) the change in fixed liabilities minus the change in fixed assets
• B) the increase in current assets
• C) the increase in current liabilities
• D) the change in current assets minus the change in current liabilities

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Definitions:

Money Security Interest

A legal claim or lien on collateral (such as cash or deposit accounts) provided by a debtor to secure a loan or other credit, ensuring the lender has a priority claim over the funds in the case of default.

Chattel Paper

A legal term referring to a document or electronic record that evidences both a monetary obligation and a security interest in a tangible good or a lease.

Security Interest

A legal claim or lien on collateral that has been pledged, often to obtain a loan, to secure the payment or performance of an obligation.

Automatic Perfection

A legal concept in secured transactions where a security interest is perfected immediately upon attachment without any further action required by the secured party.