Pressure for current asset buildup often results from:

Question

Quizplus · Accepted Answer

Rapidly expanding sales can put pressure on a firm to increase its current assets, such as inventory and accounts receivable, in order to meet the demand for its products or services. This can require a significant investment of cash and can strain short-term liquidity. While declining sales growth may also lead to a need to build up current assets, the pressure is generally not as strong as it is with rapidly expanding sales. Increased demands of short-term creditors can also create a need to buildup current assets, but this is more a consequence of the pressure than the cause. Conversely, decreased demands of short-term creditors would generally reduce the need rather than increase it.

Pressure for Current Asset Buildup Often Results From