Generally,the longer the normal inventory holding period of customers,the longer the credit period.One effect of lengthening the credit period to match the customer's merchandise holding period is to increase the payables deferral period,which shortens the customer's cash conversion cycle.

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When the credit period is lengthened to match the customer's merchandise holding period, the payables deferral period increases. This, in turn, shortens the customer's cash conversion cycle, as more time is provided for the customer to sell the merchandise and generate cash before having to pay for it. Therefore, the statement is true.

Generally,the Longer the Normal Inventory Holding Period of Customers,the Longer