A firm wants to reduce its cash cycle. Which of the following actions will reduce its cash cycle?
A) The firm reduces its Days' sales outstanding.
B) The firm increases its inventory.
C) The firm reduces its accounts payable.
D) All of these choices are correct.

Question

Quizplus · Accepted Answer

Reducing Days' Sales Outstanding (DSO) means the firm is collecting its receivables more quickly, which directly reduces the cash cycle by shortening the time cash is tied up in operations. Increasing inventory or reducing accounts payable would actually extend the cash cycle.

A Firm Wants to Reduce Its Cash Cycle