The operating cycle will decrease with all of the following changes EXCEPT
A) the cost of goods sold increases.
B) the level of credit sales increases.
C) the level of inventory decreases.
D) All of these choices are correct.

Question

Quizplus · Accepted Answer

The operating cycle is the time it takes for a company to purchase inventory, sell it, and collect the cash from the sale. An increase in the cost of goods sold or level of credit sales, or a decrease in the level of inventory, would generally decrease the length of the operating cycle by either speeding up the process or reducing the amount of inventory to manage. Therefore, all the choices provided would not increase the operating cycle, making D the correct answer.

The Operating Cycle Will Decrease with All of the Following