Answer:
True
Explanation:
The formula to compute the payback period is shown below:
Payback period = Initial investment ÷ Annual net cash inflow
When the company is cash poor so the first target is to improve the liquidity and maintain that liquidity so that the company is able to pay off its short term debt or obligations
Therefore for a long payback period and a high
A cash poor firms first target is to maintain the liquidity then it would lead to a short payback period but at the same time the less rate of return preferring a project with a long payback period having high rate
Hence, the given statement is true
