Home › CS Executive › fsm › Nature, Significance and Scope of Financial Management › The lesson observes a tension between liquidity …
The lesson observes a tension between liquidity and profitability that the financial manager must navigate. Which statement best captures the tension as the lesson describes it?
Answer & Solution
Correct answer: A.
1. The lesson positions liquidity and profitability as separate decision criteria.
2. The asset-management role crosses both lines.
3. Converting idle equipment into cash improves liquidity.
4. Reducing costs through tighter operations improves profitability.
5. The other statements misstate the relationship between the two objectives.
_Source: ICSI CS Executive Paper 8 (Financial and Strategic Management) — Lesson 1: Nature, Significance and Scope of Financial Management, pp. 6-20._
Related questions
The lesson defines Net Working Capital using a simple subtraction of two current items. WhThe lesson presents the undiscounted benefit-cost ratio as a project-evaluation criterion.The lesson, while endorsing the Quick Ratio for cash-position decisions, also flags a mainIn the EVA framework set out in the lesson, the "capital charge" is described as a specifiThe lesson uses the Average Collection Period (ACP) as a liquidity indicator. According toThe lesson critiques the pay back decision criterion on a specific structural ground. WhatThe lesson lists tools of analysis that underpin investment decisions. Which combination oThe lesson asks whether financial management is a science or an art, and gives a specific