Which of the Following Statements Is Incorrect About Working Capital

Multiple Choice

Which of the following statements is incorrect about working capital policy?

A) A company may hold a relatively large amount of cash if it anticipates uncertain sales levels in the coming year.
B) Credit policy has an impact on working capital since it has the potential to influence sales levels and the speed with which cash is collected.
C) The cash budget is useful in determining future financing needs.
D) Holding minimal levels of inventory can reduce inventory carrying costs and cannot lead to any adverse effects on profitability.
E) Managing working capital levels is important to the financial staff since it influences financing decisions and overall profitability of the firm.