The relative profitability of a firm that employs an aggressive working capital financing policy will improve when the yield curve changes from upward sloping to downward sloping.

Question

Quizplus · Accepted Answer

The yield curve does not directly affect the relative profitability of a firm that employs an aggressive working capital financing policy. The profitability of such a firm depends on the cost of financing and the returns generated from their investments. The shape of the yield curve may indirectly affect the cost of financing, but it is not the only factor that determines profitability.

The Relative Profitability of a Firm That Employs an Aggressive