The principle factors affecting the quality of working capital are:
A) The nature of the current assets.
B) The length of time to convert current assets into cash.
C) Both the nature of the current assets and the length of time to convert current assets into cash.
D) Neither the nature of the current assets nor the length of time to convert current assets into cash.

Question

Quizplus · Accepted Answer

The quality of working capital is affected by both the nature of the current assets and the length of time it takes to convert them into cash. For example, if a company has a large amount of inventory that takes a long time to sell, this will affect the quality of their working capital. Similarly, if a company has a high level of accounts receivable that take a long time to collect, this will also impact the quality of their working capital. Therefore, both factors are important in assessing the quality of working capital.

The Principle Factors Affecting the Quality of Working Capital Are