When faced with a surplus of cash, most firms should stretch their trade accounts.

Question

Quizplus · Accepted Answer

When faced with a surplus of cash, most firms should utilize the cash to invest in growth opportunities, pay down debt, or distribute to shareholders through dividends or share buybacks. Stretching their trade accounts, which means delaying payments to suppliers or customers, is not a recommended strategy as it can harm relationships and negatively impact the firm's creditworthiness.

When Faced with a Surplus of Cash, Most Firms Should