Which of the following best describes temporary working capital?
A) Incremental working capital to finance accounts receivable that are higher than expected.
B) Incremental working capital to finance high seasonal production levels.
C) Incremental working capital to finance an unplanned bargain purchase.
D) None of the above describes temporary working capital.
E) a., b., and c. above describe temporary working capital.

Question

Quizplus · Accepted Answer

Temporary working capital refers to incremental working capital needed to finance short-term increases in production and inventory levels due to seasonal fluctuations in demand. Choice A refers to accounts receivable which is not temporary working capital, while Choice C refers to a specific unplanned purchase which is not indicative of temporary working capital needs.

Which of the Following Best Describes Temporary Working Capital