Working capital alters a firm's value by affecting its free cash flow.

Question

Quizplus · Accepted Answer

Working capital, which represents the difference between a company's current assets and current liabilities, affects a firm's free cash flow. By managing working capital efficiently, a company can increase its cash flow and generate more funds to reinvest in the business or distribute to shareholders, ultimately affecting the overall value of the firm. Therefore, the statement is true.

Working Capital Alters a Firm's Value by Affecting Its Free