Paper 2 · Sources of Finance
Which action would improve the working capital position of a business enterprise?
ABuying a new delivery vehicle for cash
BIncreasing the owner's monthly drawings
CPaying suppliers earlier than the agreed credit terms
DSelling surplus premises and keeping the cash
Explanation: Selling a surplus non-current asset turns something that was not part of working capital into cash, which is a current asset, so working capital rises. Buying a vehicle for cash and increasing drawings both take cash out of the business, and settling supplier invoices early reduces cash and payables together, leaving working capital where it was.
Derived from ZIMSEC Business Enterprise Skills Paper 2, Nov 2020, Q1