Economics · Working Capital Management
Which of the following statements is generally considered correct with reference to working capital management strategies?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A trade-off plan between liquidity and profitability is considered an appropriate financing strategy for working capital.✓
- 2There is an inverse relationship between the length of the operating cycle of a firm and its working capital requirements.
- 3According to the hedging approach, temporary current assets should be financed from long-term sources.
- 4Higher net working capital leads to higher liquidity and higher profitability.
Correct answer
A trade-off plan between liquidity and profitability is considered an appropriate financing strategy for working capital.
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