Which of the following is true regarding aggressive approach to working capital financing?
2. Which of the following would be consistent with an aggressive approach to financing working capital? Your Answer: Financing short-term needs with short-term funds. Correct Answer: Financing some long-term needs with short- term funds.
Which of the following working capital strategies is the most aggressive?
a) Making greater use of short term finance and maximizing net short term asset.
What are the most commonly followed working capital policies?
The working capital policy of a company refers to the level of investment in current assets for attaining their targeted sales. It can be of three types viz. restricted, relaxed, and moderate. Commonly, these policies are also named as aggressive, conservative and hedging policy.
What are working capital strategies?
Working capital management is a business strategy designed to ensure that a company operates efficiently by monitoring and using its current assets and liabilities to the best effect.
What do you mean by permanent working capital?
Permanent working capital refers to the minimum amount of working capital i.e. the amount of current assets over current liabilities which is needed to conduct a business even during the dullest period.
Is it better to be aggressive or conservative in managing working capital?
More aggressive working capital policies are associated with higher return and higher risk while conservative working capital policies are concerned with the lower risk and return (Gardner et al. The Greater the investment in current assets, the lower the risk, but also the lower the profitability.
Why aggressive working capital policy is more profitable?
An aggressive working capital policy can produce a higher return on assets, as measured by indicators such as gross income divided by working capital. This is like leaving money on the table – you might have used the excess assets more productively to increase your return on assets.
