Asked by Megan Lawless on Jul 21, 2024
Verified
If a firm only accepts cash for the purchase of its products, what effect would this have on the operating and cash cycles?
A) The operating and cash cycles would be equal.
B) The operating and cash cycles would decrease relative to offering credit to customers.
C) Only the cash cycle would decrease relative to offering credit to customers.
D) Only the operating cycle would increase relative to offering credit to customers.
Operating Cycle
The amount of time it takes for a business to buy inventory, sell that inventory, and collect cash from the sale.
Cash Cycles
The duration it takes for a business to convert its investments in inventory and other resources back into cash flows from sales.
Accepts Cash
A phrase indicating that a business or entity is willing to receive cash as a form of payment for goods or services.
- Compute the business's operating cycle.
- Examine the effects of financial choices on the duration of cash conversion cycles.
Verified Answer
Learning Objectives
- Compute the business's operating cycle.
- Examine the effects of financial choices on the duration of cash conversion cycles.
Related questions
Orem Corporation's Current Liabilities Are $254,840, Its Long-Term Liabilities Are ...
What Is the Operating Cycle? Describe a Business Entity with ...
Which of the Following Are Included in the Cash Conversion ...
Provide a Definition for the Term Cash Cycle
Provide a Definition for the Term Operating Cycle