Which of the following is a correct statement?
A) The objective of short-term ﬁnancial management is to maximize carrying costs.
B) Managing short-term cash ﬂows involves minimizing liquidity.
C) In managing short-term ﬁnances, a ﬁnancial manager should seek the optimal level of investment in ﬁxed assets.
D) A ﬁnancial manager should use a cash budget to identify short-term ﬁnancial needs.
E) In an ideal economy, the optimal level of net working capital is positive.

Question

Quizplus · Accepted Answer

A cash budget is a tool used to forecast and manage cash flows in the short term, making it appropriate for identifying short-term financial needs. Options A and B are incorrect because short-term financial management aims to balance carrying costs and liquidity. Option C is incorrect because investments in fixed assets are typically a long-term consideration. Option E may vary depending on the company's specific circumstances and the state of the economy, and therefore cannot be universally considered correct or incorrect.

Which of the Following Is a Correct Statement