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CFA Level 1 Question of the Week - Corporate Finance
Atletico Inc. is a Spanish logistics company which is considering taking some measures to manage its working capital more effectively. However, due to a recent increase in interest rates, the banks are reluctant to lend money to Atletico's institutional clients, which is the reason why Atletico's inventory is taking longer to sell. In order to speed up the sale of inventory, Atletico has decided to offer longer collection terms to its debtors. Considering the measures that were taken by Atletico, determine if the firm's liquidity position is being weakened by 'drags' or 'pulls' on liquidity.
CFA Level 1 Question of the Week - Corporate Finance 6 votes
A. These measures signal drags on liquidity.
B. These measures signal pulls on liquidity.
C. These measures signal both drags and pulls on liquidity.