An inventory turnover increase would increase the length of a ﬁrm's cash cycle? Consider each in
isolation.

Question

Quizplus · Accepted Answer

An inventory turnover increase would actually decrease the length of a firm's cash cycle. This is because a higher inventory turnover means that inventory is being sold more quickly, which brings in cash sooner. A shorter cash cycle means that the firm has more cash available for operations or investments.

An Inventory Turnover Increase Would Increase the Length of a ﬁRm's