IMANET CMA Exam - Topic 5 Question 112 Discussion

Actual exam question for IMANET's CMA exam

Question #: 112
Topic #: 5

[All CMA Questions]

The Herb Salter Corporation is considering a plant expansion that will increase its sales and net income. The following data represent management's estimate of the impact the proposal will have on the company:

The effect of the plant expansion on Salter's networking capital will be a (n)

AIncrease of $240,000

BDecrease of $10,000

CIncrease of $230,000

DIncrease of $10,000

Show Suggested Answer

Suggested Answer: B

Net working capital is defined as current assets minus current liabilities; Net working capital is calculated as follows:

Networking capital decreases by $10,000 from the current $540,000 to $530,000 under the proposal.

by Frederica at Jun 14, 2025, 01:27 AM

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Dyan

2 months ago

Not sure about that $240,000... seems a bit high to me.

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Carylon

2 months ago

Totally agree with the $240,000 increase!

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Meaghan

2 months ago

Wait, why would it only be a $10,000 increase? That seems low.

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Troy

3 months ago

I think $230,000 makes more sense.

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Jacob

3 months ago

Looks like an increase of $240,000 is the best option!

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Terrilyn

3 months ago

I vaguely recall that an increase in net income might correlate with an increase in working capital, but I can't remember the specifics. I hope I can figure it out during the exam!

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Bulah

3 months ago

I’m a bit uncertain about the impact on networking capital. Does it always increase with expansion? I thought it could also decrease if they streamline operations.

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Cheryl

4 months ago

This question seems similar to one we practiced where we calculated changes in working capital. I think an increase of $240,000 could make sense if they need more inventory.

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Brande

4 months ago

I remember we discussed how an increase in sales usually leads to a rise in working capital, but I'm not sure about the exact numbers here.

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Paul

4 months ago

This one's tricky. I'm not entirely sure how the plant expansion will impact working capital. I'll need to review my notes and think it through step-by-step.

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Elise

4 months ago

I've got a good strategy for this. I'll calculate the change in working capital by looking at the changes in current assets and current liabilities, then select the corresponding answer choice.

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Leonora

4 months ago

Okay, let's see. The question is asking about the effect on working capital, not net income. I'll need to focus on the changes in current assets and current liabilities to determine the answer.

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Denise

5 months ago

Hmm, I'm a bit unsure about this one. I'll need to think through the relationship between working capital and net income to figure out the right answer.

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Roslyn

5 months ago

This one seems pretty straightforward. I'll need to look at the changes in working capital to determine the impact on net income.

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Dana

8 months ago

Networking capital? More like 'not working' capital, am I right? Option C is the way to go!

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Arlene

8 months ago

I'm not sure, but I think the answer might be C) Increase of $230,000.

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Alishia

8 months ago

Increase of $10,000? That's just pocket change for a plant expansion. Of course, it's option C all the way!

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Fidelia

8 months ago

I agree with Jesse, because a plant expansion usually requires more working capital.

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Bernadine

8 months ago

I'm pretty sure the networking capital will increase, not decrease. Option C it is!

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Alesia

7 months ago

Let's go with Option C then. It's the most likely outcome of the plant expansion.

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Coral

7 months ago

I'm leaning towards Option C too. It makes sense that the plant expansion would result in a higher networking capital.

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Valentine

8 months ago

I agree, the plant expansion should lead to an increase in networking capital. Option C is the most logical.

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Isaiah

8 months ago

I think the networking capital will increase as well. Option C seems like the best choice.

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Detra

8 months ago

Hmm, a decrease of $10,000 in networking capital? That doesn't sound right, especially with the projected increase in sales and net income. I'll go with option C.

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Jesse

8 months ago

I think the answer is A) Increase of $240,000.

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Annmarie

9 months ago

If the plant expansion increases sales and net income, it seems logical that it would also increase the company's networking capital. I'm going with option C.

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Yasuko

7 months ago

I'm leaning towards option A, a $240,000 increase seems like a good possibility.

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Daniela

8 months ago

I think option C makes sense, it shows a significant increase in networking capital.

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Tu

8 months ago

I agree, if the plant expansion is successful, it should boost networking capital.

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