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Management · Q113

Financial Management

Graduate and Post Graduate · Management · question 113

Q113

Which of the following is a basic principle of finance as it relates to the management of working capital?

A.
Profitability varies inversely with risk
B.
Liquidity moves together with risk
C.
Profitability moves together with risk
Answer
D.
Profitability moves together with liquidity

Answer: Option C

Solution

Answer: Option C
Solution:
Profitability moves together with risk is a basic principle of finance as it relates to the management of working capital. Profitability is ability of a company to use its resources to generate revenues in excess of its expenses.