Solution
Option 1 -> Expanding inventory would tie up more cash in stock and increase holding costs, which is counterproductive to efficient working capital management.
Option 2 -> Eliminating liabilities entirely is neither practical nor advisable, as some level of current liabilities is necessary for operational efficiency and can be cost-effective.
Option 3 -> Increasing dividends relates to profit distribution to shareholders, not to the day-to-day management of working capital and operational liquidity.
Option 4 -> Optimising cashflow ensures sufficient liquidity to meet short-term obligations while maximizing operational efficiency, which is the primary goal of working capital management.
Hence, Option 4: Optimising cashflow -> Working capital management focuses on balancing current assets and liabilities to maintain optimal liquidity, and cashflow optimization is central to ensuring the company can meet its short-term obligations while operating efficiently -> correct