Which one of the following will increase the cash cycle?
A) Paying a supplier in 42 days rather than 30 days.
B) Increasing the inventory turnover rate from 12 to 14 times.
C) Decreasing the accounts receivable period from 39 days to 34 days.
D) Increasing the inventory level by 10%.
E) Extending the due date of a bank loan by 12 months.

Question

Quizplus · Accepted Answer

Increasing the inventory level by 10% will likely increase the cash cycle because it may take longer to sell the additional inventory, thus extending the time cash is tied up in inventory.

Which One of the Following Will Increase the Cash Cycle