All other factors constant,the greater the working capital requirement to sales ratio (WCR / S),the _____________ the reliance on _______________ funds given a change in sales.

Question

Quizplus · Accepted Answer

A higher working capital requirement to sales ratio (WCR / S) implies that the firm needs more funds to support its current operations (working capital) for a given level of sales. Therefore, as sales increase, the firm is likely to rely more on external sources of funding, such as debt and equity, to finance its operations. Hence, choice A is the best answer.

All Other Factors Constant,the Greater the Working Capital Requirement to Sales