IMANET Exam CMA 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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Dana

30 days ago

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

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Arlene

1 months ago

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

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Alishia

1 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

1 months ago

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

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Bernadine

1 months ago

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

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Coral

4 days 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

18 days 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

20 days ago

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

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Detra

1 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

1 months ago

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

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Annmarie

1 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

3 days ago

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

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Daniela

8 days ago

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

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Tu

20 days ago

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

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