In Working Capital Management, Risk Is Measured by the Probability

question 221

Multiple Choice

In working capital management, risk is measured by the probability that a firm will become

• A) liquid.
• B) technically insolvent.
• C) unable to meet long-term obligations.
• D) less profitable.

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Definitions:

Centralised Communication

Pertains to a communication structure where all decisions and messages flow through a central point or individual, typically found in hierarchical organizations.

Co-ordination Loss

The inefficiencies that arise in group tasks due to the poor integration of efforts, resources, or actions among team members.

Highly Centralised

Pertaining to a system or organization where decision-making is kept at a single central point, often leading to a concentration of power.

Hub Person

An individual who acts as a central point of information and communication within a network.