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:

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

Answer:

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