Which one of the following statements concerning the cash cycle is correct?
A) The cash cycle is equal to the operating cycle minus the inventory period.
B) A negative cash cycle is actually preferable to a positive cash cycle.
C) Granting credit to slower paying customers tends to decrease the cash cycle.
D) The cash cycle plus the accounts receivable period is equal to the operating cycle.
E) The most desirable cash cycle is the one that equals zero days.

Question

Quizplus · Accepted Answer

A negative cash cycle indicates that a company is able to collect cash from sales before it needs to pay its suppliers, which is generally favorable for cash flow management.

Which One of the Following Statements Concerning the Cash Cycle