In general, a firm with higher amounts of sales on credit has
A) lower needs to borrow.
B) higher needs to borrow.
C) more rapidly collection of credit sales.
D) more ability to buy raw materials on credit.

Question

Quizplus · Accepted Answer

A firm with higher amounts of sales on credit has higher needs to borrow as it needs to finance the gap between the time it sells its products and the time it receives payment from customers. The company may need to borrow to cover its operating expenses (e.g. payroll, rent, raw materials) while waiting for payment from customers.

In General, a Firm with Higher Amounts of Sales on Credit