Insufficient working capital may result into which combination of the following? 1. Failures to adapt to changes. 2. Enhancement in credit-worthiness of the firm. 3. Reduced availability of trade and cash discounts. 4. Reduced volume of sales.

The correct answer is D. All of the above.

Insufficient working capital can lead to a number of problems, including:

• Failures to adapt to changes. When a company does not have enough working capital, it may not be able to take advantage of new opportunities or respond to changes in the market. This can lead to lost sales and profits.
• Reduced availability of trade and cash discounts. Suppliers may be less willing to extend credit to companies with insufficient working capital. This can make it more difficult for the company to purchase the goods and services it needs to operate.
• Reduced volume of sales. If a company does not have enough working capital to meet customer demand, it may have to reduce its sales. This can lead to lost sales and profits.
• Enhancement in credit-worthiness of the firm. A company with insufficient working capital may be seen as a higher risk by lenders. This can make it more difficult for the company to obtain financing, which can further limit its ability to operate.

In conclusion, insufficient working capital can have a number of negative consequences for a company. It is important for businesses to manage their working capital effectively in order to avoid these problems.

Here are some additional details on each of the options:

• Failures to adapt to changes. When a company does not have enough working capital, it may not be able to take advantage of new opportunities or respond to changes in the market. For example, if a company needs to invest in new equipment to meet increased demand, it may not be able to do so if it does not have the necessary working capital. This can lead to lost sales and profits.
• Reduced availability of trade and cash discounts. Suppliers may be less willing to extend credit to companies with insufficient working capital. This is because suppliers are more likely to be paid late by companies with cash flow problems. As a result, companies with insufficient working capital may have to pay higher prices for goods and services, which can reduce their profits.
• Reduced volume of sales. If a company does not have enough working capital to meet customer demand, it may have to reduce its sales. This is because the company may not have the inventory on hand to meet customer orders. As a result, the company may lose sales and profits.
• Enhancement in credit-worthiness of the firm. A company with insufficient working capital may be seen as a higher risk by lenders. This is because the company is more likely to default on its loans. As a result, lenders may be less willing to lend money to companies with insufficient working capital. This can further limit the company’s ability to operate.