2. Components of working capital (S31.1) True or false?

a. Companies with negative net working capital are usually in financial trouble.

b. Principal payments on long-term debt are shown as current liabilities if due within the next 12 months.

c. Accounts payable are usually a small fraction of the firm’s total liabilities.

d. Accounts receivable are usually the largest category of current assets.

e. Less profitable companies typically hold larger cash balances as a precautionary measure.

f. Well-managed companies invest the majority of their excess cash in short-term securities.

They avoid the risks of investing in long-term bonds.