[cfoley]

Hi John,

I’ve watched your videos (many thanks – they are excellent) but I have a question on this topic from the BPP questions – it’s question 44 in the Practice & Revision kit.

It says that “Overtrading often arises from a rapid increase in sales revenue.” (This is given as a correct answer in the solutions.)

I would argue that a rapid increase in sales revenue would boost Cash and hence would not cause Overtrading. I appreciate that the sales could be on credit and hence it could cause liquidity problems in the short term, but is this an example of an either/or type question (i.e. the type of question I hate!)

Thanks.

Conor.

[Author]

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