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Having a Negative Working Capital Need Is Generally Quite Advantageous

Question 2

Multiple Choice

Having a negative working capital need is generally quite advantageous to the firm since suppliers are,in this case,the most likely providers of financing and the funds they provide are not interest-bearing.Which of the following propositions is not true?


A) A firm should always have a negative Working capital need
B) Firms operating in retailing are likely to show a negative Working capital need
C) A firm that grew by financing its growth mainly through suppliers' credit is more sensitive to a downturn in its sales revenue than a firm that financed its growth through long-term debt.
D) All things being equal,the larger the negative Working capital need,the larger the profit.

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