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Dear tutor,
Can you explain for me why selling NCA results in WC is most likely to increase?
As i can guess, NCA is sold bringing the sales go up, then AR balance rise in consequence -> WC increase significantly
Thank you in advance
Selling non-current assets is not going to increase sales – it is the non-current assets (machines etc) that generate the sales.
The only reason that selling them is likely to increase working capital is because if they are sold then the company will have more cash (or if sold on credit, then more receivables) which therefore means more working capital.
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