[amp_mcq option1=”Realisation of cash from debtors” option2=”Sale of plant and machinery in cash” option3=”Issue of equity shares” option4=”Redemption of debentures” correct=”option4″]
The correct answer is: D. Redemption of debentures
Working capital is the difference between a company’s current assets and its current liabilities. It is a measure of a company’s liquidity and ability to meet its short-term obligations.
A. Realisation of cash from debtors will increase a company’s current assets and therefore increase its working capital.
B. Sale of plant and machinery in cash will increase a company’s current assets and therefore increase its working capital.
C. Issue of equity shares will increase a company’s equity and therefore increase its working capital.
D. Redemption of debentures will reduce a company’s debt and therefore reduce its current liabilities. However, it will not affect a company’s current assets. As a result, the working capital will remain unchanged.