Question

Assertion (A): The focus of calculation of working capital revolves around managing the operating cycle of the business.

Reason (R): It is because the concept of operating cycle is required to ascertain the liquidity of assets and urgency of payments to liabilities.

Options

• Both (A) and (R) are true, but (R) is not the explanation of working capital management

• Both(A) and (R) are true and (R) is a correct explanation of (A)

• Both (A) and (R) are false

• (A) is false, but (R) is true

Answer 1

Both(A) and (R) are true and (R) is a correct explanation of (A)