A seller who extends credit for a longer period than the purchaser's inventory cycle:

A) Will not end up financing other aspects of the purchaser's business beyond the immediate purchase and sale of the inventory.
B) Will force the purchaser to pay for inventory before that inventory is resold.
C) Will be assured that the purchaser will be able to convert the inventory into cash before payment is due.
D) Will have no need to offer a discount period and a net credit period.
E) Will end up financing a portion of the purchaser's receivables period as well.

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Camila Gonçalves · Accepted Answer

Final Answer : E, Explanation :  When a seller extends credit for a period longer than the purchaser's inventory cycle, it means the purchaser has additional time after selling the inventory to pay back the seller. This effectively means the seller is financing not just the inventory purchase but also a portion of the time it takes for the purchaser to collect on its sales (receivables period), as the purchaser can use the proceeds from sales to pay the seller.

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