Which one of the following statements concerning net working capital is correct?

Corporate Finance

Which one of the following statements concerning net working capital is correct?

The lower the value of net working capital the greater the ability of a firm to meet its current obligations.
An increase in net working capital must also increase current assets.
Net working capital increases when inventory is sold for cash at a profit.
Firms with equal amounts of net working capital are also equally liquid.

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Which one of the following statements concerning net working capital is correct?Answer:Net working capital increases when inventory is sold for cash at a profit.

Tags: Financial Statements, Taxes, and Cash Flow

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