A firm with a cash conversion cycle of 175 days can stretch its average payment period from 30days to 45 days. This will result in a(n)___________ in the cash conversion cycle of ____________ days.
A) increase, 15
B) increase, 45
C) decrease, 15
D) decrease, 45

Question

Quizplus · Accepted Answer

Stretching the average payment period from 30 days to 45 days decreases the cash conversion cycle by 15 days, as the firm takes longer to pay its suppliers, effectively reducing the cycle.

A Firm with a Cash Conversion Cycle of 175 Days