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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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