1. In which of the following organizations would agency problems be least likely to occur?

a. A sole proprietorship

b. A partnership

c. A public corporation

d. A private corporation

e. All of the above are equally likely to suffer from agency problems.

2. Which of the following is NOT a reason for the importance of working capital management?

Improved working capital management improves liquidity

Reducing the costs of short-term financing increases profitability

Current liabilities are not responsive to time-sensitive decisions

Managing assets so that inventory matches current sales can facilitate an inverse relationship between sales and their capital requirments