Question

Question 32 2.5pts Relative to cash flows affecting net working capital, all of the following are true EXCEPT cash inflows are generally more predictable than cash outlays cash outlays for current liabilities are relatively predictable the more predictable the cash inflows, the less net working capital a firm needs. because most firms are unable to match cash inflows to outflows with certainty, current assets that more than cover outflows for current liabilities are necessary,.

Answer 1

1 FALSE cash outlay is easily predictable from past experience as well as third party rate quotation whereas revenue generation through this investment is relatively less predictable as it is totally depends upon future circumstances TRUE cash outlay for current laibilities are relatively predictable as the value of current liabilities are certain TRUE working capital is the diffference of ourrent assets and current liabilites. Therefore as much the cash iflow will certain, that much the workign capital will be certain and can be kept at lower side as much possible TRUE If matching is not properly done, current assets to be kept unncessary uper side to cover the current liabilities.

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