An increase in sales accompanied by an increase in accounts payable will reduce the amount of new external funds required.

Question

Quizplus · Accepted Answer

If sales are increasing, this indicates that the business is generating more revenue. If accounts payable also increase, it means that the business is deferring payment to its suppliers, which can improve cash flow. Therefore, if there is an increase in sales and accounts payable, it can reduce the need for new external funds to finance growth, as the business has more money available to invest in operations.

An Increase in Sales Accompanied by an Increase in Accounts