"The Holiday Store" is a retail firm that is only open in the weeks prior to major American holidays.The rest of the year the store is closed to the public for in-store and on line sales.The store is well-managed and manages to sell a very high percentage of its inventory each holiday season.The store's working capital gap is likely:
A)to be the same at any particular date during the year.
B)lowest in the weeks leading up to times when it opens its doors to the public.
C)highest in the weeks leading up to times when it opens its doors to the public.
D)highest when they close their doors following a holiday season.

Question

Quizplus · Accepted Answer

DThe working capital gap is likely highest in the weeks leading up to times when it opens its doors to the public (C) because the store would be stocking up on inventory and spending on preparations without yet receiving sales revenue. It is also highest when they close their doors following a holiday season (D) because they might have unsold inventory and expenses to cover before revenue from sales is fully collected.

"The Holiday Store" Is a Retail Firm That Is Only