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Which one of the following is a working capital management decision?

1) Investing in new machinery
2) Hiring new employees
3) Determining the optimal level of inventory
4) Expanding into new markets

1 Answer

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Final answer:

The correct working capital management decision among the given options is determining the optimal level of inventory, as it directly relates to the management of a firm's current assets and short-term liabilities.

Step-by-step explanation:

The question asks to identify which option is a working capital management decision. Working capital management is concerned with managing the short-term assets and liabilities of a company. Among the options provided:

  • Investing in new machinery is a capital budgeting decision.
  • Hiring new employees can be considered a human resources decision.
  • Determining the optimal level of inventory is indeed part of working capital management.
  • Expanding into new markets is a strategic decision related to growth.

Therefore, the correct answer is determining the optimal level of inventory, as it relates to the management of a firm's current assets and involves decisions related to maintaining sufficient stock to meet customer demand without incurring unnecessary holding costs.

User BharathYes
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