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Auditing and Financial Management
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When creditors' velocity or creditors' turnover is higher as compared to debtors' velocity, it would
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A
have no effect on liquidity
💡 Explanation:
Creditors velocity and debtors velocity are opposing liquidity forces: one increases working capital while the other decreases it. When these velocities are similar in magnitude, they offset each other, resulting in no net effect on overall liquidity position.