The longer cash remains tied up in inventory and/or accounts receivable the greater the strain on the cash resources and liquidity of the company.

Question

Quizplus · Accepted Answer

This statement is true because if cash is tied up in inventory or accounts receivable for an extended period of time, the company may not have enough cash on hand to pay for other expenses or investments, leading to decreased liquidity and financial strain.

The Longer Cash Remains Tied Up in Inventory And/or Accounts