When Using the Bardahl Formula, an Increase in Annual Credit

question 47

Multiple Choice

When using the Bardahl formula, an increase in annual credit sales (while holding the average accounts receivable balance constant) has which of the following effects on the working capital requirements?

• A) decrease
• B) increase
• C) no effect
• D) increase, decrease, or no effect, depending on other factors

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Definitions:

Consent Decree

A legal agreement that resolves a dispute between two parties without admission of guilt (but with the court still having jurisdiction).

Cease and Desist Order

A legal order issued by a government authority or court directing an individual or entity to stop an alleged illegal activity.

Misleading Advertisement

Marketing materials that deceive or mislead consumers about the nature or value of a product.

Federal Consumer Credit Protection Act

A United States law enacted in 1968 aimed at protecting consumers in financial transactions by requiring clear disclosure of terms and costs of credit and establishing consumer rights regarding credit billing and electronic fund transfers.