The operating cycle must lengthen when the:
A) Accounts receivable turnover rate increases.
B) Accounts payable period increases.
C) Cash cycle decreases.
D) Inventory turnover rate decreases.
E) Accounts receivable period decreases.

Question

Quizplus · Accepted Answer

The operating cycle lengthens when the inventory turnover rate decreases because it means inventory stays in stock longer before being sold, thus extending the time from purchasing inventory to receiving cash from sales.

The Operating Cycle Must Lengthen When The