The correct answer is: (A) is correct, but (R) is incorrect.
Working capital is a measure of a company’s liquidity and efficiency in managing its short-term assets and liabilities. It is calculated as current assets minus current liabilities.
Current assets are assets that are expected to be converted into cash within one year, such as cash, accounts receivable, and inventory. Current liabilities are liabilities that are due within one year, such as accounts payable and short-term debt.
The management of working capital is important because it can have a significant impact on a company’s profitability. A company with a well-managed working capital will be able to generate more cash flow, which can be used to invest in new projects, pay down debt, or return capital to shareholders.
The major thrust of working capital management is on the management of current assets, because current assets are the most liquid assets and have the greatest impact on a company’s cash flow. However, current liabilities also need to be managed carefully, as they can also have a significant impact on a company’s cash flow.
For example, if a company has a lot of accounts receivable, it may need to offer its customers longer payment terms, which can reduce its cash flow. On the other hand, if a company has a lot of accounts payable, it may need to pay its suppliers earlier, which can also reduce its cash flow.
Therefore, the management of working capital is a complex process that requires careful consideration of both current assets and current liabilities.
The assertion (A) is correct, because working capital management refers to the management of current assets and current liabilities. The reason (R) is incorrect, because the major thrust is on the management of both current assets and current liabilities, not just current assets.