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which of the following will lead to a negative change in net working capital? A. Increase...

which of the following will lead to a negative change in net working capital?
A. Increase in Inventory
B. Sale of fixed assets
C. Purchase of equipment
D. Increase in current liabilities and no change in current assets
E. Increase in current assets and decrease in current liabilities

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Answer #1

D. Increase in current liabilities and no change in current assets.

Net working capital is calculated as current assets-current liabilities. Negative change in net working capital occurs when there is a net increase in current liabilities when compared to current assets. Among the given options, option D satisfies this condition. In option A, increase in inventory results in positive change as it leads to increase in current assets. Option B has no effect. Option C also has no effect as it comes under fixed assets. Option D results in negative change. Option E results in postive change.

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