A strict credit policy by the supplier necessitates the firm to maintain ......................... working capital to make purchases.

More

A strict credit policy by the supplier necessitates the firm to maintain more working capital to make purchases.

Here's why:

• Strict credit policy means the supplier offers shorter payment terms or requires advance payment for orders.
• This means the firm needs to have more cash on hand to make timely payments, even before they receive payment from their customers.
• This additional cash requirement translates to higher working capital, which is the difference between current assets and current liabilities.

Therefore, the correct answer is more.