Other things held constant, which of the following alternatives would increase a company's cash flow for the current year?
A) Increase the number of years over which fixed assets are depreciated for tax purposes.
B) Pay down the accounts payables.
C) Reduce the days' sales outstanding (DSO) without affecting sales or operating costs.
D) Pay workers more frequently to decrease the accrued wages balance.
E) Reduce the inventory turnover ratio without affecting sales or operating costs.

Question

Quizplus · Accepted Answer

Reducing the days' sales outstanding (DSO) means collecting payments from customers more quickly, which increases the amount of cash the company has on hand for the current year. Choices A, B, D, and E all involve either increased expenses or decreased revenues, which would decrease cash flow.

Other Things Held Constant, Which of the Following Alternatives Would