A Company That Sells Primarily on a Cash Basis Could

question 49

True/False

A company that sells primarily on a cash basis could support a lower quick ratio because their cash inflow is faster than a company selling on credit.

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Definitions:

Inventory

Items such as raw materials, work-in-progress, and finished goods that a company holds for the purpose of sale in the ordinary course of business.

Inventory Management

The systematic approach to ordering, storing, and using a company's inventory, including raw materials, components, and finished products.

Price Declines

A reduction in the market price of goods, services, or securities.

Physical Inventory

The process of counting all physical merchandise or stock in a store or warehouse to verify records and ensure accuracy in financial accounting.