Assertion (A): Working capital should be optimum, so that neither profitability nor liquidity is affected. Reason (R): If working capital is more than required it will increase the liquidity and profitability.

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KollegeApply · Accepted Answer

Assertion (A) is True but Reason (R) is False. Explanation: • Assertion (A): Working capital should be optimum so that profitability and liquidity are balanced – True. • Reason (R): If working capital is more than required, it increases liquidity (True), but reduces profitability, as excess funds remain idle. So this part is False.

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