Asked by
Yulianna Lopez
on Dec 20, 2024Verified
An aggressive working capital policy would include:
A) using short term financing to finance only the peak temporary working capital.
B) using short term financing to finance all temporary working capital.
C) using short term financing to finance all temporary and some permanent working capital.
D) both a. and b. above describe aggressive working capital policies.
E) All of the above describe aggressive working capital policies.
Aggressive Working Capital Policy
A strategy involving higher levels of current assets relative to liabilities, aiming for growth but increasing liquidity risk.
Short Term Financing
Borrowing funds for a period typically less than one year, often used to cover gaps in cash flow or finance immediate expenses.
Temporary Working Capital
Additional working capital required to support the fluctuating operational needs of a business beyond its permanent working capital.
- Understand the impact of working capital on a firm’s financial policies.
- Recognize the role of aggressive working capital policies and their risk implications.
Verified Answer
ZC
Learning Objectives
- Understand the impact of working capital on a firm’s financial policies.
- Recognize the role of aggressive working capital policies and their risk implications.