Which action would NOT be likely to shorten the length of the cash conversion cycle?
A)adopting a new inventory system that reduces the inventory conversion period
B)reducing the average DSO on its accounts receivable
C)reducing the amount of time the company takes to pay its suppliers
D)increasing sales while maintaining the same level of receivables

Question

Quizplus · Accepted Answer

Reducing the amount of time the company takes to pay its suppliers would not be likely to shorten the length of the cash conversion cycle. In fact, it could potentially lengthen it if suppliers begin to restrict credit or demand faster payments, leading to a shorter accounts payable conversion period but a longer overall cycle. A shorter inventory conversion period (option A), reducing DSO on accounts receivable (option B), and increasing sales while maintaining the same level of receivables (option D) are all actions that can help to reduce the cash conversion cycle.

Which Action Would NOT Be Likely to Shorten the Length