The Goal of Working Capital Management Is to

question 46

Multiple Choice

The goal of working capital management is to

• A) achieve a balance between risk and return in order to maximize the firm's value.
• B) balance current assets against current liabilities.
• C) achieve a balance between short-term and long-term assets so that they add to the achievement of the firm's overall goals.
• D) pay off short-term debts.

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Definitions:

Inferior Good

A type of good for which demand decreases when consumers' income increases, opposite to normal goods.

Perfectly Inelastic

Describes a situation where the demand for a good does not change in response to a change in price.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, defined as the percentage change in quantity demanded divided by the percentage change in price.

Demand Curve

A diagram displaying the connection between a product or service's price and the amount requested over a specified timeframe.