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A. Compensating balances are often part of revolving bank lending arrangements. For borrowers, they must...

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A. Compensating balances are often part of revolving bank lending arrangements. For borrowers, they must agree to such terms which will add to the cost of financing. Discuss why borrowers would agree to such terms. (3 marks) B. In accounting, accounts payable and accounts receivable are often confused with each other. For businesses, they try to slow down its payables and accelerate its receivables for working capital management. Provide detailed explanation on this issue related to cash conversion cycle. (5 marks) A. Compensating balances are often part of revolving bank lending arrangements. For borrowers, they must agree to such terms which will add to the cost of financing. Discuss why borrowers would agree to such terms. (3 marks) B. In accounting, accounts payable and accounts receivable are often confused with each other. For businesses, they try to slow down its payables and accelerate its receivables for working capital management. Provide detailed explanation on this issue related to cash conversion cycle

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