A service business would normally have a larger cash outlay in the initial phase of its cash-to-cash cycle than a retail company.

Question

Quizplus · Accepted Answer

A retail company typically has to purchase inventory and pay for it upfront, which results in a larger cash outlay in the initial phase of its cash-to-cash cycle. In contrast, a service business may not have significant upfront costs and its cash-to-cash cycle may be shorter.

A Service Business Would Normally Have a Larger Cash Outlay