CFA CFA Level 1 Question of the Week – Corporate Finance

Question of the Week – Corporate Finance

  • This topic has 3 replies, 2 voices, and was last updated Oct-18 by AdaptPrep.
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    • AdaptPrep
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      Which of the following examples would be best described
      as a drag on liquidity?

      • Reduced line of credit
      • Early payment to creditors
      • Delinquent account receivable
    • Pahtsan
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      Are these all Level I questions?

    • AdaptPrep
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      @Pahtsan Yes, they are.

    • AdaptPrep
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      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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