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Up7
Which of the following examples would best be described as a drag on liquidity?
- Early payment to creditors
- A delinquent account receivable
- A reduced line of credit
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Up5
Doesn’t a reduced line of credit mean that it’s difficult to get credit now which is an unexpected reduction in money coming in?
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Up4
Woo! I got it right. 🙂
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Up0
In basic terms, for a company to be liquid, money must come in before it
goes out. There are 2 potential difficulties; drags and pulls. A drag is when
the money doesn’t come in when expected (such as an account receivable
being late or uncollectible). A pull is when the money must go out
sooner than expected (such as a reduced line of credit, or early payments).
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