The Need to Manage Net Working Capital Arises Because

question 25

Multiple Choice

The need to manage net working capital arises because:

• A) Financial management is naturally broken into those areas.
• B) Shareholders want to ensure they receive dividend payments.
• C) there is a mismatch between the timing of cash inflows and cash outflows.
• D) the sum of current assets and current liabilities usually is zero.
• E) the capital structure pie is limited in size.

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Definitions:

Cognitive Flexibility

The mental ability to switch between thinking about two different concepts, or to think about multiple concepts simultaneously.

Transductive Reasoning

A form of reasoning where conclusions are drawn based on specific examples or instances, rather than through abstract logic, prevalent in young children.

Class Inclusion

The principle that one category or class of things can include several subclasses.

Subclasses

Categories that are subordinate to a larger class, providing a means to organize elements into hierarchies or specializations.