Which of the following will increase the cash cycle,all else constant?
I.increasing the inventory period
II.decreasing the accounts receivable turnover rate
III.increasing the accounts payable period
IV.decreasing the accounts receivable period
A)I and II only
B)III and IV only
C)I and IV only
D)I, II, and III only
E)I, III, and IV only

Question

Quizplus · Accepted Answer

Increasing the inventory period means that the company is holding onto inventory for a longer period of time before selling it, which will increase the cash cycle. Decreasing the accounts receivable turnover rate means that it is taking the company longer to collect payments from customers, also increasing the cash cycle. Increasing the accounts payable period and decreasing the accounts receivable period would both have the opposite effect of decreasing the cash cycle.

Which of the Following Will Increase the Cash Cycle,all Else