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      Question

      Which of the following is a major risk for MSMEs that is

      caused by delays in payments from large customers and the accumulation of receivables?
      A Market risk Correct Answer Incorrect Answer
      B Liquidity risk Correct Answer Incorrect Answer
      C Credit risk Correct Answer Incorrect Answer
      D Foreign exchange risk Correct Answer Incorrect Answer
      E Operational risk Correct Answer Incorrect Answer

      Solution

      Liquidity risk arises when an MSME’s ability to meet its short-term obligations is compromised, particularly due to delays in the collection of receivables. This can prevent the MSME from having enough cash flow to pay for raw materials, wages, or other operational expenses.

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