Which one of the folowing is a false statement?

(A) Net working capital is equal to current assets minus current liabilities.

(B) It means that the cash that will become available over the next 12 month exceeds the cash that must be paid over the same period.

(C) Net working capital is usually negative in a healthy firm.

2. For each of the following statements indicate whether the statement is true or false and explain why.

a) Under the classical tax system dividends are effectively taxed at the higher of the personal or corporate tax rate.

b) Under the imputation tax system dividends are effectively taxed at the lower of the personal or corporate tax rate.

c) A company can pay a dividend only if it is currently earning profits.

d) The residual dividend policy is used by most companies.