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

Be aware of effective job search record-keeping and the importance of a professional portfolio.

Understand the various paths to career advancement within the legal field.

Learn how to effectively manage stress in a legal work environment.

Know the components and strategies for negotiating compensation in paralegal positions.

---

Definitions:

Current Year

The ongoing calendar year or fiscal year in which a company or individual is reporting or analyzing financial information.

Debt to Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by its shareholders' equity.

Total Liabilities

The sum of all financial obligations a company owes to outside parties, including both short-term and long-term debts.

Total Equity

The total net value of a company, calculated as the difference between total assets and total liabilities, representing the ownership interest of the shareholders.