in finance world all decision made by manager and executive directors are implement based on assumed to gain more shareholders wealth and apply the...

in finance world all decision made by manager and executive directors are implement based on assumed to gain more shareholders wealth and apply the right working capital decisions. Working capital management is one of the most component of finance as its affect the liquidity of the company and profitability. working capital management deals with current assets and current liabilities(ALShubiri,2011).

The working capital management contain of two characteristics of risks in risk return trade off, the liquidity risk and the risk of opportunity loss. The risk- trade off describe that high risk is conduct with high expected of return and low risk is associated with expected and actual return. The first characteristic of risk return trade is liquidity of risk means that the company dont has cash available on thier account to pay. On other hand, the seconf characteristics is risk of opportunity lose conduct of not being able either to sell or produce and thats will lead to lose profit because there were not enough funds to support higher inventory and book debts. The company can eliminate their liquidity of risk through long-term debt of reduce the expenses of return invested capital. However, the risk return trade off involves an increased risk of liquidity versus increased profitability (n,d, 2017).

According to Lahmiri (2013), explained all the returns in stock are positively related to risk that is measured by volatility. Also, the risk-return relationship in Saudi Arabia is not high significant. However, the investors in Saudi Arabia are rewarded for step forward in taking more risk.

the question i need to answer based on the discussion i write is:

Do you think the acid test or quick ratio would be a better indicator?