Receivables might be sold to

Question

Quizplus · Accepted Answer

Selling receivables is a way to generate cash quickly, which can improve a company's liquidity position. Lengthening the cash-to-cash operating cycle would have the opposite effect, as it would increase the amount of time it takes to convert inventory into cash. Deep discounts on the net realizable value of receivables wouldn't provide a benefit to the company, as it would reduce the amount of cash received for the receivables. Selling receivables for an amount greater than net realizable value would be unlikely, as the purchaser would not want to pay more than the receivables are worth.

Receivables Might Be Sold to