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Question
Liberal credit policy creates a problem of bad debts.
Options
True
False
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Solution
This statement is True.
Explanation:
If the firm does not get a credit facility for purchases but adopts a liberal credit policy for its sales, it requires more working capital. On the other hand, if credit terms of purchases are favourable and terms of credit sales are less liberal, then the cash requirement will be less.
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RELATED QUESTIONS
Match the correct pairs:
| Group 'A' | Group 'B' | ||
| (1) | Working capital | (a) | Redeemed capital |
| (2) | Equity share capital | (b) | Secretary |
| (3) | Share warrant | (c) | Shares do not have distinctive numbers |
| (4) | Recommendation of dividend | (d) | Fixed assets |
| (5) | Fungibility | (e) | The link between SEBI and Depository |
| (f) | Board of Directors | ||
| (g) | Registered document | ||
| (h) | Sum of current assets | ||
| (i) | Bearer document | ||
| (j) | Permanent capital |
Fixed capital is also referred as circulating capital.
State whether the following statement is true or false.
Financial institutions and banks cater to the working capital requirement of business.
Explain the following term/concept.
Fixed capital
State any four factors affecting fixed capital requirement.
Justify the following statement.
Fixed capital stays in the business almost permanently.
Discuss the factors determining working capital requirement.
______ capital is used to carry out day-to-day business activities.
Distinguish between the following.
Fixed Capital and Working Capital.
Liberal credit policy creats a problem of bad debts.
Distinguish between the following.
Fixed Capital and Working Capital.
Liberal credit policy creates a problem of bad debts.
Liberal credit policy creates a problem of bad debts.
Distinguish between the following.
Fixed Capital and Working Capital.
Distinguish between the following.
Fixed Capital and Working Capital
Distinguish between the following.
Fixed Capital and Working Capital.
Distinguish between the following.
Fixed Capital and Working Capital.
Liberal credit policy creates a problem of bad debts.
