If net working capital became negative, this is considered _____.

A) bad, because it will reduce cash flow
B) good, because entities other than the firm are supplying all of the short-term funding for running the operations of the firm
C) bad, because it makes the current ratio less than one
D) good, because it makes the current ratio greater than one

Net Working Capital

Net working capital is a financial metric that represents the difference between a company's current assets and current liabilities.

Current Ratio

Current assets divided by current liabilities. A financial ratio that measures a firm’s liquidity, the ability to pay its bills in the short run.

Short-Term Funding

Financing obtained for a period typically less than one year to support immediate operational needs or liquidity.