If a Profitable Firm Finds That It Simply Must "Stretch

question 112

True/False

If a profitable firm finds that it simply must "stretch" its accounts payable, then this suggests that it is undercapitalized, i.e., that it needs more working capital to support its operations.

---

Definitions:

Net Realizable Value

The estimated selling price in the ordinary course of business minus any costs necessary to make the sale.

Major Inventory

Major Inventory refers to the significant stock of goods a company holds for the purpose of sale or production in its normal business operations.

Valuation

The process of determining the current worth of an asset or a company, based on metrics such as earnings, sales, assets, and more.

Unit Cost

The cost incurred to produce, store, and sell one unit of a product or service.