Working capital policy involves a tradeoff between easier operation and ____.
A)more working capital
B)spontaneous liabilities
C)temporary financing
D)the cost of carrying short-term assets

Question

Quizplus · Accepted Answer

Working capital policy involves a balance between having sufficient working capital to operate the business smoothly and minimizing the cost of carrying short-term assets. Choosing to maintain excess working capital may make operations easier but it comes at a cost, which could negatively impact the company's profitability. Therefore, the best choice is D as it reflects the tradeoff that exists between having adequate working capital and the cost of maintaining it.

Working Capital Policy Involves a Tradeoff Between Easier Operation and ____