A Small Company Has Current Assets of $112,000 and Current

question 38

Multiple Choice

A small company has current assets of $112,000 and current liabilities of $117,000.Which of the following statements about that company are most likely to be true?

• A)Since net working capital is negative,the company will not have enough funds to meet its obligations.
• B)Since net working capital is high,the company will likely have little difficulty meeting its obligations.
• C)Since net working capital is very high,the company will have ample money to invest after it meets its obligations.
• D)Since net working capital is nearly zero,the company is well run and will have little difficulty attracting investors.

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Definitions:

Rationalization

The process of providing a logical, plausible, and socially acceptable explanation for behaviors that might otherwise be perceived as irrational.

Defence Mechanism

Psychological strategies brought into play by individuals, groups, or even nations to cope with reality and maintain self-image.

Identification

The process of recognizing and acknowledging something or someone as being a specific person or thing.

Inferiority

A feeling of being less than, not as important, or lacking in some way compared to others, which can impact an individual's self-esteem and overall psychological well-being.