Which one of the following statements is correct concerning the cash cycle?
A) The longer the cash cycle, the more likely a firm will need external financing.
B) Increasing the accounts payable period increases the cash cycle.
C) A positive cash cycle is preferable to a negative cash cycle.
D) The cash cycle can exceed the operating cycle if the payables period is equal to zero.
E) Adopting a more liberal accounts receivable policy will tend to decrease the cash cyclE.

Question

Quizplus · Accepted Answer

A longer cash cycle means that a firm is holding onto its cash for longer periods of time, leading to a greater need for external financing to pay for expenses in the meantime.

Which One of the Following Statements Is Correct Concerning the Cash