Improving working capital via non-current funding Steps:

• Working capital = current assets (CA) - current liabilities (CL); improvements require increasing CA without raising CL.
• Proposal 1: Raises overdraft limit but adds no CA unless borrowed, then +CA and +CL equally (net zero).
• Proposal 2: +$2000 CA from relative loan, +$2000 CL (six months = current), net zero.
• Proposal 3: +$2000 CA, +$2000 long-term liability (two years), +$2000 WC.
• Proposal 4: Owner transfer in sole trader adds $2000 CA and equity (not liability), +$2000 WC.

Why the correct option is correct:

• D (3 and 4) increases CA without increasing CL, directly raising working capital per its definition.

Why the others are wrong:

• A: 1 yields net zero; 2 adds equal CA and CL.
• B: 1 yields net zero.
• C: 2 adds equal CA and CL.

Final answer: D