Paper 2 · Sources of Finance
Which of the following is a method a business might use to improve control of its working capital?
AExtending the length of time it typically takes to sell off its stock
BIncreasing the level of idle stock held unnecessarily in its warehouse
CDelaying payment to its own creditors for an indefinite period of time
DReducing the average period taken by debtors to pay what they owe
Explanation: Working capital control can be improved by reducing the debtors' collection period, managing stock levels efficiently, and extending (within reason) the creditors' payment period, not by holding excess idle stock or delaying payments indefinitely, which damages supplier relationships.
Derived from ZIMSEC Business_studies Paper 2, June 2019, Q47
