Receivables might be sold to
A) lengthen the cash-to-cash operating cycle.
B) take advantage of deep discounts on the cash realizable value of receivables.
C) generate cash quickly.
D) finance companies at an amount greater than cash realizable value.

Question

Quizplus · Accepted Answer

Receivables may be sold to generate cash quickly. This is especially useful when a company needs immediate cash to meet its obligations, invest in growth opportunities, or cover unexpected expenses. The process of selling receivables is also known as factoring, and it involves selling the right to collect on the receivables to a third-party at a discounted rate in exchange for immediate cash. This can be a helpful strategy to improve a company's cash flow and liquidity.

Receivables Might Be Sold to