An aggressive working capital policy would have which of the following characteristics?
A) A high ratio of long-term debt to fixed assets
B) A low ratio of short-term debt to fixed assets
C) A high ratio of short-term debt to long-term sources of funds
D) A short average collection period

Question

Quizplus · Accepted Answer

An aggressive working capital policy involves financing short-term assets with short-term liabilities, which leads to a high ratio of short-term debt to long-term sources of funds. This strategy allows the company to maximize its returns on investment, but it also increases its risk. A high ratio of long-term debt to fixed assets (A) would indicate a more conservative financing approach. A low ratio of short-term debt to fixed assets (B) would indicate that the company is relying more on long-term debt to finance its investments. A short average collection period (D) may be a characteristic of an aggressive working capital policy, but it is not a defining feature.

An Aggressive Working Capital Policy Would Have Which of the Following