Asked by Danielle Toone on Jul 06, 2024
Verified
Offering a larger discount for cash sales will likely increase the firm's cash cycle.
Cash Sales
Transactions in which goods or services are paid for and received at the time of the transaction with cash or other immediate payment methods.
Cash Cycle
The period between the purchase of inventory and the collection of receivables from customers, indicating liquidity.
Discount
A reduction from the usual cost of something.
- Evaluate the consequences of credit policies on the management of cash flows and the cycle of cash.
Verified Answer
PS
Peter SteveJul 13, 2024
Final Answer :
False
Explanation :
Offering a larger discount for cash sales encourages customers to pay sooner, thereby reducing the time it takes for the company to convert its inventory into cash, and thus shortening the cash cycle.
Learning Objectives
- Evaluate the consequences of credit policies on the management of cash flows and the cycle of cash.
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