Which of the following would raise a red flag about the cash-to-cash cycle when reviewing the Statement of Cash Flows?
A) increase in both accounts receivable and accounts payable
B) decrease in both accounts receivable and accounts payable
C) increase in accounts receivable and decrease in accounts payable
D) stable levels of accounts receivable and accounts payable.

Question

Quizplus · Accepted Answer

An increase in accounts receivable and a decrease in accounts payable would raise a red flag as it indicates that the company is taking longer to collect cash from customers while paying its suppliers more quickly, potentially leading to cash flow issues.

Which of the Following Would Raise a Red Flag About