If a Company's Operating Cycle Is Much Longer Than Its

question 178

True/False

If a company's operating cycle is much longer than its average payment period for suppliers, it creates the need to borrow money to fund its inventories and accounts receivable.

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Definitions:

Economy

The system by which goods and services are produced, distributed, and consumed in a society or geographic area.

Goods And Services

Goods and services constitute the output of an economy, where goods are tangible products and services are intangible activities that provide value to consumers.

Scarcity

The limited nature of society’s resources.

Trade-Offs

Situations where having more of one thing necessarily means having less of another because of limited resources.