Question

True or False: If a firm changes its credit policy and allows customers to pay in 90 days instead of 60 days, and everything else remains the same, the net cash flow in the next quarter is likely to decrease.

Answer 1

Answer:

True

Explanation:

by increasing the time customers can pay to 90 days, the amount of cash inflows is likely to reduce. thus, the net cash flow in the next quarter is likely to decrease.