In general, the larger the portion of a firm's sales that are on credit, the

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When a larger portion of a firm's sales are on credit, it means that the firm is allowing customers to defer payment for goods or services that have already been delivered. This creates a cash flow gap for the firm, as they must still cover the costs associated with producing or providing those goods or services. To bridge this gap, the firm may need to borrow money to finance their operations until they receive payment from their customers. Therefore, the higher the portion of sales that are on credit, the higher the firm's need to borrow.

In General, the Larger the Portion of a Firm's Sales