Having a Negative Working Capital Need Is Generally Quite Advantageous

question 10

Multiple Choice

Having a negative working capital need is generally quite advantageous to the firm since suppliers are,in this case,the most likely providers of financing and the funds they provide are not interest-bearing.Which of the following propositions is not true?

• A) A firm should always have a negative Working capital need
• B) Firms operating in retailing are likely to show a negative Working capital need
• C) A firm that grew by financing its growth mainly through suppliers' credit is more sensitive to a downturn in its sales revenue than a firm that financed its growth through long-term debt.
• D) All things being equal,the larger the negative Working capital need,the larger the profit.

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Definitions:

Susceptible

The condition of being susceptible to damage or impact from a specific thing or situation.

Selection

Selection refers to the process of choosing from various options or alternatives based on certain criteria.

Personality Traits

Enduring characteristics or patterns of thought, emotion, and behavior that distinguish individuals from one another.

Adolescence

The transitional stage of growth and development between childhood and adulthood, marked by physical, psychological, and social changes.