alleryThe working capital requirement of a business tends to be higher when:
Asales are strictly for cash with fast turnover
Bthe operating cycle is long and more credit is allowed to customers
Cthe operating cycle is very short
Dinventory is kept to a minimum
Answer & Solution
Correct answer: B. the operating cycle is long and more credit is allowed to customers
A long operating cycle and liberal credit to customers tie up more funds, raising working capital needs.
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