1. A decrease in ________ would increase net working capital.
A) accounts payable
B) accounts receivable
C) cash
D) equipment
2. In general, the greater a firm's reliance upon short-term debt or current liabilities, the lower the:
A) liquidity.
B) flexibility.
C) certainty of interest costs.
D) both A and C.
3. Within the context of working capital management:
A) as the firm increases its investment in working capital, there is a corresponding increase in its profits.
B) current liabilities provide a flexible means of financing the firm's fluctuating needs for assets.
C) the use of current liabilities or short-term debt as opposed to long-term debt subjects the firm to less risk of illiquidity.
D) all of the above.