A Firm Tries to Extend Its Disbursement Float in Order

question 33

Multiple Choice

A firm tries to extend its disbursement float in order to reduce its working capital needs. Which of the following is a risk that may be associated with this strategy, if it is taken too far?

• A)may attract a late fee
• B)may jeopardise the entire relationship with the supplier
• C)may be required to pay before delivery for future supplies
• D)all of the above

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Definitions:

Proprietor

The owner of a business establishment, a shop, or any other commercial enterprise.

Sole Proprietorship's Profits

The total income a sole proprietorship generates after expenses are deducted, belonging entirely to the business owner.

Deception

The act of misleading or tricking someone into believing something that is not true, often for personal gain.

Franchisor

A business entity that grants another party the right to operate a business using its trademark, products, and business model.