General Studies · Working Capital Management

Consider the following statements regarding Working Capital Management: Statement 1: Working capital management involves a continuous trade-off between liquidity and profitability, where maintaining high levels of current assets reduces the risk of insolvency but simultaneously lowers the overall return on investment. Statement 2: The Cash Conversion Cycle is an effective tool for measuring efficiency, as it captures the time between paying for inputs and receiving cash from outputs. Statement 3: Regulatory frameworks in India, such as the Tandon and Nayak committees, provide recommendations for bank credit assessment. Statement 4: Modern techniques like Factoring, Forfaiting, and Reverse Factoring have expanded the options for firms to manage receivables and payables dynamic manner. Statement 5: A comprehensive credit appraisal by a bank includes a sensitivity analysis of working capital requirements against market changes. Which option represents the most accurate evaluation of these statements?