If a firm's inventory ratio increases, what will happen to the firm's cash cycle?
A) It will increase.
B) It will decrease.
C) It will increase and then slowly decrease back to the initial level.
D) It will decrease and then slowly increase back to the initial level.

Question

Quizplus · Accepted Answer

The cash cycle lengthens when a firm's inventory ratio increases because it takes longer to convert inventory into sales and ultimately into cash.

If a Firm's Inventory Ratio Increases, What Will Happen to the Firm's