If a company can stretch its accounts payable without damaging its credit rating, it is effectively ___________ the cost of foregoing the cash discount.

Question

Quizplus · Accepted Answer

By stretching its accounts payable, the company is effectively delaying payment to its suppliers. However, if it can do this without negatively affecting its credit rating, it is able to forego the cost of the cash discount offered by the supplier. This reduction in cost is achieved through the delay of payment, which allows the company to hold on to its cash for a longer period of time.

If a Company Can Stretch Its Accounts Payable Without Damaging