Question:

a) What is the relationship between the predictability of a firm's cash inflows and its required level of net working capital?How are the net working capital , liquidity , and risk of technical insilveny related? (8 Marks)

b)Why does an increase in the ratio of current assets to total assets decrease both profits and risk as measured by net working capital?How do changes in the ratio of current liabilities to total assets affect profitability and risk?