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Hi. The question is the following…
Gorwa Co’s working capital is most likely to increase in which of the following situations?
Payments to suppliers are delayed
The period of credit extended to customers is reduced
Non-current assets are sold
Inventory levels are increasedWhy the answer is non current assets are sold? I thought this had no effect at all in working capital.
Thank you for your lectures and notes… very useful.
In future, you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
If non-current assets are sold, then the company will either have more cash or (if they are sold on credit) more receivables.
More cash or more receivables will mean more working capital 🙂
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