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:

Acceptance

The process of recognizing and welcoming actual situations or facts without trying to change them.

Exposure

A therapeutic technique used in cognitive-behavioral therapy to treat anxiety disorders, which involves confronting the feared object, situation, or activity in a real or imagined way.

Psychotherapy

A treatment method for mental health disorders and emotional difficulties that involves talking to a psychologist or other mental health provider.

Schizophrenia

A long-term mental disorder involving a breakdown in the relation between thought, emotion, and behavior, leading to faulty perception and inappropriate actions.