The operating cycle will increase with all of the following changes except ____________.
A) The cost of goods sold increases
B) The level of accounts receivable increases
C) The level of inventory increases
D) All of these will increase the operating cycle

Question

Quizplus · Accepted Answer

The operating cycle measures the time period between purchasing inventory and receiving cash from the sale of that inventory. Therefore, an increase in cost of goods sold, level of accounts receivable, or level of inventory will increase the operating cycle as it takes longer to sell inventory and collect cash.

The Operating Cycle Will Increase with All of the Following