Insufficient working capital may result into which combination of the following? i. Failures to adapt to changes. ii. Enhancement in credit-worthiness of the firm. iii. Reduced availability of trade and cash discounts. iv. Reduced volume of sales.

The correct answer is: C. i, ii, iv

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 maintain its inventory levels, it may have to reduce its sales. This can lead to lost sales and profits.

In addition, insufficient working capital can also lead to:

• Increased costs. Companies with insufficient working capital may have to pay higher interest rates on loans. They may also have to pay late fees to suppliers.
• Reduced profitability. When a company does not have enough working capital, it may not be able to generate enough cash flow to cover its operating expenses and debt service. This can lead to reduced profitability.
• Financial distress. In severe cases, insufficient working capital can lead to financial distress, bankruptcy, and even liquidation.

Therefore, it is important for companies to manage their working capital effectively. This involves ensuring that they have enough cash on hand to meet their short-term obligations and that they are able to generate enough cash flow to cover their long-term needs.