Asked by Seniha Elcik on Jul 14, 2024
Verified
Selling more inventory on credit rather than for cash will shorten the cash cycle.
Inventory
The goods and materials that a business holds for the purpose of resale or production.
Credit
The trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately but promises either to repay or return those resources at a later date.
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, measuring how efficiently a company manages its working capital.
- Identify the impact of credit policies on cash flows and the cash cycle.
Verified Answer
Learning Objectives
- Identify the impact of credit policies on cash flows and the cash cycle.
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