The principle factor(s)affecting the quality of working capital is (are):
A)The nature of the current assets.
B)The length of time to convert current assets into cash.
C)Both the nature of the current assets and the length of time to convert current assets into cash.
D)Neither the nature of the current assets nor the length of time to convert current assets into cash.

Question

Quizplus · Accepted Answer

Both the nature of the current assets (e.g. inventory, accounts receivable) and the length of time it takes to convert them into cash (e.g. inventory turnover, collection period) can significantly affect the quality of working capital. If current assets are difficult to convert into cash or are of low quality, it can lead to a liquidity risk and impact the overall financial health of the company. Therefore, it is important for companies to manage their working capital effectively, ensuring that current assets are of high quality and can be quickly converted into cash when needed.

The Principle Factor(s)affecting the Quality of Working Capital Is (Are)