Register now or log in to join your professional community.
During the year company's current assets increased by $120,0, current liabilities decreased by $50,0, and net working capital a. Increased by70,0 b. Did not change c. Decreased by $170,0 d. Increased by $170,0
correct answer is d. Increased by $170,0
d. Increased by $170 - Increase in Current Asset shows additional liquidity & decrease in Current liabilties resulting to positive liquidity ratio.
Option (d). Increased by $170,0
D Increase in NWC by............................
Increased by $170
As NWC = Current assets - current liabilites
NWC increase by increasing current assets and decreasing current liabilities; means NWC = increase in current assets + decrease in current liabilities =120+50 =170 increase
answer dworking capital = libilities -assets
=-"-"answe d
D; Increas by $170
because
WC =CA-CL
suppose before
CA=100 , CL =60
Then ,
WC40=100-60
Now CA100+120=220 , CL=60-50=10
new
WC210=220-10
Change in WC =210-40=170 Increases
Increase by170 is the right answer
As Working capital = Current assets - current liabilities
Hence it is increased by $170
d. Increased by $170 , assets increased, liabilities reduced.
deffinatly decrease by170
because imagine CL is100 and CA is100
so now CL decrease by50 and CA increase by120 so
now CL would be50 only and CA would be220
now working capital = CA-CL
so220-50=170 so workind capital would increase by170
(D) is right answer
