Mr. Sami, Chief Financial Officer (CFO) of SNTCompany, is planning to

QUESTION

Mr. Sami, Chief Financial Officer (CFO) of SNTCompany, is planning to change the working capital policy of thecompany. Currently, the company is employing conservativeworking capital policy but Mr. Sami has plannedto set the working capital policy as aggressive. What would b
Liquidity: Ability to meet financial obligations as they comedue -Conservative policy would yield the highest current ratio andthe aggressive policy would yield the lowest current ratio.Profitability: Rate of return on companys total assets-Conservative policy would yield a lower

expected profitabilityand the aggressive policy would yield a higher expectedprofitability.Risk:Conservative policy yields the lowest risk and the aggressivepolicy yields the highest risk.

ANSWER:

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