Question

Higher working capital usually results in
A. higher current ratio, higher risk and higher profits
B. lower current ratio, higher risk and profits
C. higher equity, lower risk and higher profits
D. Lower equity, lower risk higher profits.

Answer 1

Correct Answer - A
(a)higher current ratio, higher risk and higher profits
If a company has a higher working capital then there will be a higher current ratio, ( I,e, current assests over current liabilites), higher risk and higher profits.