Which of the following could be the cause of a lengthening cash cycle?
I.Extending the time period before paying a supplier for a credit purchase
II.Issuing credit to less credit-worthy customers than in previous periods
III.Purchasing inventory that is less-desired by customers than prior inventory purchases
IV.Offering customers cash discounts for prompt payment

Question

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Issuing credit to less credit-worthy customers than in previous periods (II) can lead to longer payment cycles as these customers may take longer to pay or default on their debts. Purchasing inventory that is less-desired by customers than prior inventory purchases (III) can also lead to longer cycles as it may take longer to sell the inventory and receive payment. Extending the time period before paying a supplier for a credit purchase (I) could also contribute to a lengthening cash cycle, but it is not as directly related as II and III. Offering cash discounts for prompt payment (IV) would actually help to shorten the cash cycle, so it is not a contributing factor.

Which of the Following Could Be the Cause of a Lengthening