The sale of receivables by a business
A) indicates that the business is in financial difficulty.
B) is generally the major revenue item on its income statement.
C) is an indication that the business is owned by a factor.
D) can be a quick way to generate cash for operating needs.

Question

Quizplus · Accepted Answer

Selling receivables can be a quick way for a business to generate cash for operating needs without taking on new debt or equity. It is a common practice for businesses to sell their receivables to third-party investors, known as factors, in exchange for cash. This allows businesses to improve their cash flow and fund their day-to-day operations.

The Sale of Receivables by a Business