Delaying the payment of accounts payable in order to improve cash management is known as
A) ruining the firm's credit rating.
B) stretching the payables.
C) reducing optimal cash requirements.
D) float.

Question

Quizplus · Accepted Answer

Stretching the payables means delaying payment of accounts payable in order to improve cash management. This can be a useful tactic for firms to improve their cash flow and meet their financial obligations as they fall due, although it should not be overused as it can harm the firm's relationships with suppliers and damage their credit rating. Float refers to the time delay between when a payment is initiated and when it is actually settled, and reducing optimal cash requirements is not a term normally used in this context.

Delaying the Payment of Accounts Payable in Order to Improve