Which of the Following Is a Correct Statement

question 258

Multiple Choice

Which of the following is a correct statement?

• A) The objective of short-term financial management is to maximize carrying costs.
• B) Managing short-term cash flows involves minimizing liquidity.
• C) In managing short-term finances, a financial manager should seek the optimal level of investment in fixed assets.
• D) A financial manager should use a cash budget to identify short-term financial needs.
• E) In an ideal economy, the optimal level of net working capital is positive.

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Definitions:

Investment Project D

A specific project undertaking related to investment, often involving substantial capital expenditure and financial planning.

Profitability Index

A financial metric used to evaluate the profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Incremental Annual Revenues

The additional revenue generated from a specific action or decision, measured on an annual basis.

Scrap Value

The estimated resale value of an asset at the end of its useful life, typically associated with machinery, equipment, or vehicles.