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      Question

      Which of the following reduces working capital

      requirement?
      A Longer credit period to customers (increase receivables) Correct Answer Incorrect Answer
      B Faster collection from customers (reduce receivables) Correct Answer Incorrect Answer
      C Increase in inventory holding days Correct Answer Incorrect Answer
      D Decrease in payables days (pay suppliers faster) Correct Answer Incorrect Answer
      E Increase in prepaid expenses Correct Answer Incorrect Answer

      Solution

      Faster collections reduce receivables and working capital need.

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