Which of the Following Statements Is False

question 32

Multiple Choice

Which of the following statements is false?

• A) The main components of net working capital are cash, inventory, receivables, and payables.
• B) The firm's cash cycle is the average length of time between when a firm originally purchases its inventory and when it receives the cash back from selling its product.
• C) Working capital includes the cash that is needed to run the firm on a day-to-day basis. It does not include excess cash, which is cash that is not required to run the business and can be invested at a market rate.
• D) If the firm pays cash for its inventory, the firm's operating cycle is identical to the firm's cash cycle.

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Definitions:

Collateral Agreements

Contracts that pledge an asset as security for the repayment of a loan, providing a lender a form of protection against the borrower's default.

Unsecured Debt

Debt that is not backed by any collateral, meaning if the borrower defaults, the lender has no secured asset to claim for repayment.

Mortgage

A loan typically used to purchase property or real estate, where the property itself serves as collateral for the loan.

Title

The legal right to own, use, or dispose of something, particularly property or intellectual property.