A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

Question

Quizplus · Accepted Answer

The statement is true. A merchandiser's ability to pay its short-term obligations directly depends on how quickly it sells its merchandise inventory as inventory represents a significant portion of its current assets. The faster it sells its inventory, the more cash it generates, which can be used to pay off its short-term liabilities.

A Merchandiser's Ability to Pay Its Short-Term Obligations Depends on Many