Asked by gabriela huselton on Jul 03, 2024
Verified
Which of the following statements is false?
A) A basic principle of cash management is to increase the speed of paying liabilities.
B) A company should plan the timing of major expenditures in light of its operating cycle.
C) A cash budget will help determine if additional financing will be necessary.
D) A key principle of cash management is to increase the speed of collection on receivables.
Cash Management
The process of collecting, managing, and investing a company's cash flows in a way that maximizes liquidity and profitability.
Operating Cycle
The duration of time it takes for a company to purchase inventory, sell it, and convert the sale into cash through customer payments.
- Grasp the basic principles of cash management, including managing receivables, payables, and cash flows.
Verified Answer
ZW
Zachary WrightJul 09, 2024
Final Answer :
A
Explanation :
A basic principle of cash management is to increase the speed of collection on receivables and delay the payment of liabilities as long as possible without incurring penalties, rather than increasing the speed of paying liabilities. This helps in maximizing the cash available for the business operations.
Learning Objectives
- Grasp the basic principles of cash management, including managing receivables, payables, and cash flows.