Starrs Company has current assets of $300,000 and current liabilities of $200,00

Question

Starrs Company has current assets of $300,000 and current liabilities of $200,000. Which of the following transactions would increase its working capital?

Prepayment of $50,000 of next year's rent

Refinancing $50,000 of short-term debt with long-term debt

Acquisition of land valued at $50,000 by issuing new common stock

Purchase of $50,000 of marketable securities for cash

Prepayment of $50,000 of next year's rent

Refinancing $50,000 of short-term debt with long-term debt

Acquisition of land valued at $50,000 by issuing new common stock

Purchase of $50,000 of marketable securities for cash

Explanation / Answer

The formula to calculate working capital = current assets

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