Mycale's has always paid its suppliers in 30 days. The company just hired a new ﬁnancial oﬃcer who is changing the policy such that suppliers will now be paid in 45 days. This change will ______
The accounts payable period and _______ the cash cycle.
A) Increase; not affect
B) Increase; increase
C) Increase; decrease
D) Decrease; increase
E) Decrease; decrease

Question

Quizplus · Accepted Answer

Increasing the accounts payable period decreases the cash cycle because the company retains cash longer before paying suppliers.

Mycale's Has Always Paid Its Suppliers in 30 Days