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    Question

    Which of the following financial management practices

    is most critical for MSMEs to ensure financial sustainability in a competitive market?
    A Capital structure management through a mix of debt and equity financing Correct Answer Incorrect Answer
    B Aggressive expansion with heavy reliance on external financing Correct Answer Incorrect Answer
    C Profit maximization without considering cash flow management Correct Answer Incorrect Answer
    D Short-term borrowing to finance long-term investments Correct Answer Incorrect Answer
    E Ignoring working capital management for growth-focused investments Correct Answer Incorrect Answer

    Solution

    Capital structure management is vital for MSMEs to balance the cost of capital and financial risk , ensuring long-term sustainability. A strategic mix of debt and equity helps MSMEs minimize their financing costs and maintain financial health.

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