Asked by Jaren Harth on Jul 06, 2024

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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.
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Chastiny WalkerJul 12, 2024
Final Answer :
C
Explanation :
Receivables may be sold to generate cash quickly. This is especially useful when a company needs immediate cash to meet its obligations, invest in growth opportunities, or cover unexpected expenses. The process of selling receivables is also known as factoring, and it involves selling the right to collect on the receivables to a third-party at a discounted rate in exchange for immediate cash. This can be a helpful strategy to improve a company's cash flow and liquidity.