An increase in the average payment period will result in___________ in the operating cycle and___________in the cash conversion cycle.
A) an increase; a decrease
B) a decrease; a decrease
C) no change; a decrease
D) a decrease; no change

Question

Quizplus · Accepted Answer

An increase in the average payment period does not affect the operating cycle, but it decreases the cash conversion cycle because the company takes longer to pay its suppliers, thus retaining cash longer.

An Increase in the Average Payment Period Will Result In___________