Use the information for the question(s) below.
-The above graph shows the levels of fixed assets, permanent working capital and temporary working capital for a certain company. If the graphs below show the excess cash reserves on hand each quarter, which best illustrates a conservative financing policy?

Question

Use the information for the question(s) below. 
-The above graph shows the levels of fixed assets, permanent working capital and temporary working capital for a certain company. If the graphs below show the excess cash reserves on hand each quarter, which best illustrates a conservative financing policy?

Quizplus · Accepted Answer

A conservative financing policy aims to keep excess cash reserves on hand to mitigate financial risks and uncertainties. In graph B, the excess cash reserves remain at a relatively constant level, indicating a conservative approach to financing. Graphs A, C, and D show fluctuations in excess cash reserves, indicating a more aggressive or risky financing approach.

Use the Information for the Question(s) Below