The purpose of managing current assets and current liabilities is to
A) achieve as low a level of current assets as possible.
B) achieve as low a level of current liabilities as possible.
C) achieve a balance between profitability and risk that contributes to the firm's value.
D) achieve as high a level of current liabilities as possible.

Question

Quizplus · Accepted Answer

The purpose of managing current assets and current liabilities is to achieve a balance between profitability and risk that contributes to the firm's value. The goal is not to minimize or maximize either current assets or current liabilities but to effectively manage them in order to optimize the firm's financial position. A balance between the two helps ensure that a company has enough liquidity to meet its short-term obligations while also generating sufficient profit to create value for shareholders.

The Purpose of Managing Current Assets and Current Liabilities Is