Asked by Navjot Sandhu on May 02, 2024
Verified
If you delay paying your suppliers by an additional ten days, then:
A) Your payables turnover rate will increase.
B) You will require less bank financing of your operations.
C) The cash cycle will increase by ten days.
D) Your operating cycle will lengthen by ten days.
E) Your stock-out costs will rise.
Payables Turnover Rate
A financial efficiency ratio that measures how quickly a company pays off its suppliers by comparing net credit purchases to average accounts payable.
Cash Cycle
The period between the outlay of cash for the purchase of raw materials and the collection of cash from the sale of products, indicating the efficiency of a company's cash management.
Operating Cycle
The duration between the acquisition of inventory by a company and the collection of payment for the sales of that inventory.
- Analyze the impact of payment policies on the cash cycle.
Verified Answer
Learning Objectives
- Analyze the impact of payment policies on the cash cycle.
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