A. Financial leverage is concerned with the amount of debt that a company has. It is not relevant to this situation.
B. Operating leverage is related to the amount of fixed costs that the company has. It is not relevant to this question.
C. Any working capital management question that a company makes is based on the cost/benefit of the situation. By having more cash and marketable securities, there is less chance of default, but there is also a lower rate of return since this assets provide little, if any, return.
D. Flotation costs are costs connected to the issuance of debt or equity. It is not related to this question.
