Determining the appropriate level of working capital for a firm requires

Changing the capital structure and dividend policy of the firm.
Maintaining short-term debt at the lowest possible level because it is generally more expensive than long-term debt.
Offsetting the benefit of current assets and current liabilities against the probability of technical insolvency.
Maintaining a high proportion of liquid assets to total assets in order to maximize the return on total investments.Show Result

Correct - Your answer is correct.

Wrong - Your answer is wrong.

Detailed Answer

Answer (C) is correct. Working capital finance concerns the determination of the optimal level, mix, and use of current assets and current liabilities. The objective is to minimize the cost of maintaining liquidity while guarding against the possibility of technical insolvency. Technical insolvency is defined as the inability to pay debts as they come due.