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Explain how rapidly expanding sales can drain the cash resources of a firm?

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Wiki User
2010-05-16 18:54:15

Rapidly expanding sales will require a buildup in assets to

support the growth. In particular, more and more of the increase in

current assets will be permanent in nature. A nonliquidating

aggregate stock of current assets will be necessary to allow for

floor displays, multiple items for selection, and other purposes.

All of these "asset" investments can drain the cash resources of

the firm.

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