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:

Deductible

An amount that a policyholder must pay out of pocket before an insurance company will cover any expenses.

Premium

The amount paid for an insurance policy or the fee charged by insurers for providing coverage.

Comprehensive Coverage

A type of automobile insurance that provides protection against loss when the insured’s car is damaged or destroyed by fire, lightning, flood, hail, windstorm, riot, vandalism, or theft.

Actual Cash Value

The amount equal to the replacement cost of damaged or stolen property minus depreciation.