A firm adopting an aggressive working capital approach is more sensitive to unexpected changes in the term structure of interest rates than is a firm with a conservative policy.

Question

Quizplus · Accepted Answer

A firm adopting an aggressive working capital approach typically relies more heavily on short-term financing, which can be impacted more by changes in interest rates. Therefore, unexpected changes in interest rates can have a larger impact on the firm's financial position and profitability. Meanwhile, a firm with a conservative working capital policy may have more stable sources of funding and be less affected by changes in interest rates.

A Firm Adopting an Aggressive Working Capital Approach Is More