[amp_mcq option1=”Long-term funds have been used for fixed assets” option2=”Short-term funds have been used for fixed assets” option3=”Long-term funds have been used for current assets” option4=”Short-term funds have been used for current assets” correct=”option1″]<\/p>\n
The correct answer is: Short-term funds have been used for current assets.<\/strong><\/p>\n Net working capital is a measure of a company’s liquidity. It is calculated by subtracting current liabilities from current assets. A negative net working capital means that a company has more current liabilities than current assets. This can be a sign that the company is having difficulty meeting its short-term obligations.<\/p>\n There are a few reasons why a company might have a negative net working capital. One reason is that the company is growing rapidly. When a company is growing, it often needs to invest in new assets, such as inventory and equipment. This can require the company to borrow money, which can increase its current liabilities.<\/p>\n Another reason for a negative net working capital is that the company is not managing its cash flow effectively. If a company is not collecting its receivables on time or paying its payables late, it can accumulate a large amount of current liabilities.<\/p>\n A negative net working capital can be a sign of trouble for a company. However, it is important to note that not all companies with a negative net working capital are in trouble. Some companies, such as those in the technology industry, intentionally operate with a negative net working capital in order to invest in growth.<\/p>\n If you are concerned about your company’s net working capital, you should talk to your accountant or financial advisor. They can help you understand the reasons for your company’s net working capital and develop a plan to improve it.<\/p>\n Here is a brief explanation of each option:<\/p>\n [amp_mcq option1=”Long-term funds have been used for fixed assets” option2=”Short-term funds have been used for fixed assets” option3=”Long-term funds have been used for current assets” option4=”Short-term funds have been used for current assets” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[700],"tags":[],"class_list":["post-33683","post","type-post","status-publish","format-standard","hentry","category-business-finance","no-featured-image-padding"],"yoast_head":"\n\n