Certain financing plans are termed conservative when ________.
A) short-term financing is used frequently
B) working capital is relatively high
C) current assets are relatively low
D) risk is increased

Question

Quizplus · Accepted Answer

Conservative financing plans prioritize stability and security over risk-taking, which is why they are often characterized by a relatively high level of working capital. This provides a buffer in case of unexpected expenses or revenue shortfalls, and helps ensure that the company can meet its financial obligations without relying too heavily on external financing. Short-term financing, relatively low current assets, and increased risk would not be consistent with a conservative financing plan.

Certain Financing Plans Are Termed Conservative When ________