If a Firm Starts Selling Its Accounts Receivable to a Factor

question 41

Multiple Choice

If a firm starts selling its accounts receivable to a factor, how will the firm's cash cycle change?

• A) The firm will increase its cash cycle since it will now have to wait longer for payment.
• B) The firm will decrease its cash cycle since accounts receivable is reduced.
• C) Depending on conditions, the cash cycle could either increase or decrease.
• D) There will be no change.

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Definitions:

Broad Coalition

A wide-ranging alliance among diverse groups or entities, often formed to achieve a common objective or to address a significant issue.

Implementing Change

The process whereby new methods, practices, or innovations are put into place within an organization or system.

Cumulative Effects

The overall impact of multiple factors or actions, considered collectively rather than individually.

Inoculate

To introduce a microorganism or vaccine into an organism to stimulate immunity against a specific disease or to impart a specific quality.