Which of the Following Is Most Likely to Occur If

question 132

Multiple Choice

Which of the following is most likely to occur if a firm under-invests in net working capital?

• A) The firm might not have sufficient cash to pay its bill in a timely manner.
• B) The firm might not have adequate inventory to meet the needs of its customers.
• C) The firm could be losing sales because its terms of sale are too strict.
• D) All of the above.

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Definitions:

Shareholders

Individuals or entities that own shares in a company, giving them partial ownership and potentially a say in company decisions depending on the type of shares held.

Sole Proprietorship

A business owned and operated by a single individual, with no legal distinction between the owner and the business entity.

Legal Structure

Pertains to the type of legal organization an entity chooses for the formation of their business, such as a corporation, partnership, limited liability company (LLC), or sole proprietorship.

Sole Proprietorship

A business structure where a single individual owns, operates, and is personally responsible for all aspects of the business.