Question

Which of the following can lead to a decrease in the net working capital of a firm?
      
An increase in inventory.
       
A decrease in accounts payable.
       
An increase in the checking account balance.

A decrease in accounts receivable.

Answer 1

Answer: A decrease in accounts receivable.

Net working capital = Current assets - Current liabilities

Now, anything that decreases the current assets or increases current liabilities, would decrease the net working capital. So in the options above,

An increase in inventory. - increases current assets
A decrease in accounts payable. - decreases current liabilities
An increase in the checking account balance. - increases current assets

A decrease in accounts receivable. - decreases current assets - only this meets our assessment