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March 27, 2017

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In general, the larger the portion of a firm's sales that are on credit, the:

A. lower will be the firm's need to borrow
B. higher will be the firm's need to borrow
C. more rapidly credit sales will be paid off
D. more the firm can buy raw materials on credit

This question seems straight foward, the more a firm sells on credit the less inventory and cash the company will have. The company may have to borrow the maoney it needs to operate.

B is my answer ....is this correct?

  • finance firm's sales on credit - ,

    I agree; B. is the only one that makes sense.

  • finance firm's sales on credit - ,

    Answer is B.

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