Home › BBA Finance › Financial Management › Working Capital Management › Because payments for purchases are usually made …
Because payments for purchases are usually made on credit, cash outflows in a month often do not equal:
AThe taxes owed
BThe rent charged
CThe purchases made
DThe salaries paid
Answer & Solution
Correct answer: C. The purchases made
1. Buying and paying happen at different times.
2. Payment spreads over a period.
3. Outflows do not equal the purchases made.
_Source: OpenStax Principles of Finance 2e, Chapter 19, The Importance of Working Capital._
Related questions
Excess cash invested in cash alternatives is said to create:Assets that turn into cash within a year through normal operations are contrasted with capCash held by a business is needed above all to pay the bills and meet the:Credit taken from suppliers, recorded as accounts payable, is called:Better inventory management, better collections and longer supplier terms together will:Working capital needs that stay in place all year round are described as:Working capital needs that rise and fall with the season are described as:The first step in working out the inventory conversion period is to calculate the: