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Financial Management — Business Studies STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceBusiness StudiesFinancial Management1 Mark
MCQ
Higher working capital usually results in:
  • ✓
    Higher current ratio, higher risk and higher profits.
  • B
    Lower current ratio, higher risk and profits.
  • C
    Higher equity, lower risk and lower profits.
  • D
    Lower equity, lower risk and higher profits.
✓

Answer

Correct option: A.
Higher current ratio, higher risk and higher profits.
If a company has a higher working capital then there will be a higher current ratio, (i.e. current assets over current liabilities), higher risk and higher profits.

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