As long as a firm is generating positive net income each year it need not be concerned with working capital management because it will always be able to meet all short-term liquidity needs.

Question

Quizplus · Accepted Answer

Even if a firm is generating positive net income, it needs to ensure that it has adequate working capital to meet its short-term liquidity needs. Insufficient working capital can result in cash flow problems, missed payment deadlines, and a damaged reputation. Therefore, effective working capital management is important for both profitable and unprofitable firms alike.

As Long as a Firm Is Generating Positive Net Income