The author presents evidence that recently Southwest Airlines had a negative working capital gap. Which of the following reasons is likely to be primarily responsible for this enviable situation
A) Southwest borrows a lot of money short-term thus keeping their borrowing costs low.
B) Southwest receives payment from customers in advance of most flights.
C) Southwest pays for fuel far in advance of the flights.
D) Southwest grants unusually long credit terms to encourage high levels of accounts receivable
B
You might also like to view...
For a given constant required rate of return, the greatest portion of a preferred stockholder's return
comes from increases in the price of preferred stock. Indicate whether the statement is true or false
A farmer sows a certain crop. It costs $240,000 to buy the seed, prepare the ground, and sow the crop. In one year's time it will cost $93,200 to harvest the crop. If the crop will be worth $350,000, and the interest rate is 7%,
what is the net present value (NPV) of this investment? A) $240,000 B) $87,103 C) $0 D) $567,103