Final answer:
A short-term, internal source of funds can indeed be obtained by reducing short-term assets. This is true as companies can improve liquidity via efficient working capital management, which often includes managing inventory levels and receivables.
Step-by-step explanation:
The statement that a short-term, internal source of funds can be obtained by reducing short-term assets such as inventory, cash, & other working-capital items is true. Firms can release funds by managing their working capital more efficiently, which includes reducing inventory levels, collecting receivables faster, and extending payment terms with suppliers. This is often a more immediate and cost-effective way to access funds compared to external sources such as borrowing from banks or issuing bonds. However, it is critical to balance the need for liquidity and operational efficiency to avoid disrupting the company's operations.
Working capital management is crucial for maintaining the financial health of a company. A balance sheet details a company's assets and liabilities, providing insight into its short-term financial standing. Careful management can improve a company's liquidity without the need to increase debt or dilute ownership through selling stock.