Which of the Following Is TRUE of Net Working Capital

question 108

Multiple Choice

Which of the following is TRUE of net working capital?

• A)When current assets of a firm exceed its current liabilities,a firm is said to have negative net working capital.
• B)When current assets of a firm are less than its total assets,a firm is said to have positive net working capital.
• C)When current assets of a firm exceed its current liabilities,a firm is said to have positive net working capital.
• D)When current assets of a firm exceed its total assets,the firm is said to have negative net working capital.

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Definitions:

Expectations Theory

A hypothesis in finance that the long-term interest rates reflect expected future short-term rates, adjusting for risk premium.

Dividend Distribution

The payment of a portion of a company's earnings to its shareholders, usually in the form of cash or additional stock.

Signaling Effect

The notion that actions by a company can provide signals to investors and the market about its future prospects.

Excess Cash

Funds that exceed the normal operational needs of a business, which may be invested or used for additional expenditures.