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Questions and Answers
What is one way a company can reduce its short-term debts to improve working capital?
What is one way a company can reduce its short-term debts to improve working capital?
- Increase inventory reserves
- Spend more internally
- Extend credit to more customers
- Avoid taking on unnecessary debt (correct)
Which of the following actions can improve a company's working capital?
Which of the following actions can improve a company's working capital?
- Extending credit to customers (correct)
- Increasing short-term debts
- Reducing current assets
- Spending more externally
How are cash flow and working capital related?
How are cash flow and working capital related?
- They are independent variables
- Working capital is a component of cash flow
- Cash flow is a component of working capital (correct)
- They have no relationship
What is one way a company can improve its working capital by managing its current assets?
What is one way a company can improve its working capital by managing its current assets?
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Why should a company be mindful of spending both externally and internally to improve working capital?
Why should a company be mindful of spending both externally and internally to improve working capital?
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