The Change in Net Working Capital When Evaluating a Capital

question 95

Multiple Choice

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

• A) the change in current liabilities minus the change in current 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:

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.

Company's Risk

Refers to the potential for loss or adverse effects on a company's financial health and operational performance, due to internal or external factors.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest held by shareholders.

Net Income

The conclusive profit figure for a company after all taxes, costs, and expenses are subtracted from its aggregate revenue.