Question

Higher working capital usually results in :

Options

• higher current ratio, higher risk and higher profits

• lower current ratio, higher risk and.profits

• higher equity, lower risk and lower profits

• higher equity, lower risk and lower profits

Answer 1

higher current ratio, higher risk and higher profits

Explanation - 

The amount of current assets in excess of current obligations is referred to as a company's working capital. When a company's working capital is higher, the current ratio (the ratio of current assets to current liabilities) is higher, and the risk and profits are higher.