If a firm is involuntarily "stretching" its accounts payable then this is one sign that it is undercapitalised; that is, that it needs more working capital for operations.

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When a firm "stretches" its accounts payable, it means that it is delaying payment to its suppliers beyond the normal payment terms. This may be a sign that the firm is having cash flow problems and is undercapitalized. It needs more working capital to finance its operations and pay its bills on time.

If a Firm Is Involuntarily "Stretching" Its Accounts Payable Then