The financial position of companies whose business is seasonal can be dramatically different depending upon the time of year chosen to construct financial statements. This time sensitivity is especially true with respect to the firm's balance sheet.

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The statement is true. Since the financial position of seasonal companies can vary greatly depending on the time of year, their balance sheet can be affected by factors such as inventory levels, accounts receivable and payables, and cash flow at different times in the year. Therefore, the balance sheet can be significantly impacted by the seasonality of the company's operations.

The Financial Position of Companies Whose Business Is Seasonal Can