Company A grants credit terms of 30 days to Company B. The operating cycle of Company B is 20 days. In this case, Company A

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
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Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Question 9 of 50
Company A grants credit terms of 30 days to
Company B. The operating cycle of Company B is
20 days. In this case, Company A
O A. is, in effect, financing more than
Company B's inventory needs.
B. is, in effect, financing less than
Company B's inventory needs.
C. will have a lower level of accounts
receivable than those companies
granting shorter credit terms.
Transcribed Image Text:Question 9 of 50 Company A grants credit terms of 30 days to Company B. The operating cycle of Company B is 20 days. In this case, Company A O A. is, in effect, financing more than Company B's inventory needs. B. is, in effect, financing less than Company B's inventory needs. C. will have a lower level of accounts receivable than those companies granting shorter credit terms.
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