Discuss the risk-return trade-off experienced in working-capital management
What will be an ideal response?
Working-capital management (involving current asset investment and use of current liabilities) is in effect evaluating
the risk-return trade-off. Investing in current assets reduces the risk of illiquidity at the expense of lowering its overall
rate of return. Using long-term financing increases liquidity while reducing its rate of return on assets.
You might also like to view...
Which of the following best describes the components of the marketing mix?
A) all aspects of the marketing environment B) everything considered during tactical planning C) product, price, place, and promotion D) production, price, distribution, and people E) people, product, price, and placement
Product storage is an example of waste in the sense that no value is added
Indicate whether the statement is true or false