Question

under which circumstance would a company want to reexamine its level of working capital?

if it cant pay its long - term debts and expenses with current assets

if its current liabilities are less than its current assets

if it has negative working capital and cant reduce current liabilities

if working capital goes positive

Explanation:

1. Analyze Option 1: Long - term debts are not repaid with current assets (current assets are for short - term obligations). So this is incorrect.
2. Analyze Option 2: If current liabilities < current assets, working capital (current assets - current liabilities) is positive, which is a good sign, no need to reexamine.
3. Analyze Option 3: Negative working capital (current liabilities > current assets) and inability to reduce current liabilities means the company has a liquidity problem. So it would want to reexamine working capital.
4. Analyze Option 4: Positive working capital is favorable, no need to reexamine.

Answer:

C. If it has negative working capital and can't reduce current liabilities