In general, the more net working capital a firm has, ________.
A) the greater its risk
B) the lower its risk
C) the less likely are creditors to lend to the firm
D) the lower its level of long-term funds

Question

Quizplus · Accepted Answer

Having more net working capital means that the firm has more current assets than current liabilities, which indicates that it is in a better position to meet its short-term obligations. This reduces the risk of defaulting on short-term debt and can increase the firm's credibility in the eyes of creditors and investors. Therefore, option B is the correct answer.

In General, the More Net Working Capital a Firm Has