rapid build-up of inventories normally requires additional financing, unless the increase is matched by an equally large decrease in some other asset.

Question

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Rapid build-up of inventories can require additional financing as it leads to an increase in current assets which may not be matched by an equally large decrease in any other asset. This can put a strain on the company's cash resources and may require additional funding to meet the increased working capital requirements.

Rapid Build-Up of Inventories Normally Requires Additional Financing, Unless the Increase