If Working Capital Is Allowed to Increase to an Inappropriately

question 9

Multiple Choice

If working capital is allowed to increase to an inappropriately high level:

• A)it can reduce the average rate of return on equity.
• B)there will be an opportunity cost of doing so
• C)all of the options are true
• D)it can reduce the average rate of return on assets

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Definitions:

Nasogastric Tube

A flexible tube that is inserted through the nose into the stomach to deliver food and medicine or to remove stomach contents.

Ileus

A temporary cessation of bowel motility, leading to obstruction symptoms without a physical blockage in the intestines.

Peristalsis

The involuntary constriction and relaxation of the muscles in the intestine or another canal, creating wave-like movements that push contents forward.

Anemia

A condition in which there is a deficiency of red cells or of hemoglobin in the blood, leading to fatigue, weakness, and shortness of breath.