Question : Company following liberal credit policy needs more working capital due to higher amount of debtors. Which of the following factors affect the working capital requirements in the given statement?
Option 1: Scale of operations
Option 2: Business cycle
Option 3: Credit allowed
Option 4: Credit availed
Answer (1)
13th Jan, 2024
Correct Answer: Credit allowed
Solution : Credit policy of the company determines the average time period needed to collect the sale proceeds. A company following liberal credit policy needs more working capital due to higher amount of debtors.
Hence, option C is correct.
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