A Firm Which Uses the Aggressive Financing Strategy Plans to Purchase

Multiple Choice

A firm which uses the aggressive financing strategy plans to purchase raw materials in large quantities to take price discounts. The firm will finance the purchase with a long-term loan. The most likely consequence of this action is ________.

A) a decrease in the current ratio
B) an increase in net working capital
C) an increase in risk of insolvency
D) a decrease in net working capital