Kizspy Question: 13
(Choose 1 answer)
Which of the following statements about working capital trade-off is true?
A. Financial managers need to balance operating shortage costs against financial shortage costs to find an
optimal management strategy.
B. If carrying costs are greater than shortage costs, then the firm will maximize value by adopting a more
flexible strategy.
C. If shortage costs dominate carrying costs, the firm will need to move toward a more restrictive policy.
D. Financial managers need to balance shortage costs against carrying costs to find an optimal management
strategy.
