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Question 386 - CSCP discussion

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A company that is effectively managing its cash will have which of the following conditions?

A.
Low accounts receivable, tow inventory, high accounts payable
Answers
A.
Low accounts receivable, tow inventory, high accounts payable
B.
High accounts receivable, low inventory, high accounts payable
Answers
B.
High accounts receivable, low inventory, high accounts payable
C.
Low accounts receivable, high inventory, low accounts payable
Answers
C.
Low accounts receivable, high inventory, low accounts payable
D.
High accounts receivable. high inventory. low accounts payable
Answers
D.
High accounts receivable. high inventory. low accounts payable
Suggested answer: A

Explanation:

Effectively managing cash involves maintaining low accounts receivable, low inventory, and high accounts payable. Low accounts receivable indicates that the company is collecting cash from its customers efficiently. Low inventory means that the company is not tying up too much cash in stock, and high accounts payable suggests that the company is leveraging credit terms with its suppliers, thus preserving its cash reserves for other operational needs.

Financial management textbooks and resources.

Articles on working capital management from financial journals.

asked 16/09/2024
om Kumar
42 questions
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