Asked by Jaren Harth on Jul 06, 2024
Verified
Receivables might be sold to
A) lengthen the cash-to-cash operating cycle.
B) take advantage of deep discounts on the cash realizable value of receivables.
C) generate cash quickly.
D) finance companies at an amount greater than cash realizable value.
Receivables
Money owed to a company by its customers or others for goods or services that have been delivered or used but not yet paid for.
Cash Realizable Value
The net amount of cash that is expected to be generated from the conversion of assets.
Operating Cycle
The period of time it takes for a company to purchase inventory, sell it, and turn the sales back into cash.
- Appreciate the results of selling receivables to a factor, focusing on the handling of service charges.
Verified Answer
Learning Objectives
- Appreciate the results of selling receivables to a factor, focusing on the handling of service charges.
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