29: Sources of Capital Flashcards
1
Q
Operating cycle =
A
days of inventory + days of receivables
2
Q
occurs when disbursements are made too quickly: current liabilities are paid instead of being held or when credit availability is reduced or limited
A
A “pull” on liquidity
3
Q
occurs when receipts lag: non-cash current assets do not convert to cash quickly
A
“drag” on liquidity
4
Q
High cash conversion cycle implies that a company:
A
has excessive investment in working capital
5
Q
A revolving line of credit is typically ______ than an uncommitted or committed line of credit and thus is considered :
A
for a longer term
a more reliable source of liquidity
