The correct answer to the given question is option B. Having a larger percentage of customers paying with cash instead of credit.
How can cash to cash cycle be improved?
6 Ways to Improve Cash-to-Cash Cycle Time
- Don’t Offer Extended Terms.
- Split Fees for Faster Collection.
- Optimize Inventory.
- Get Lean.
- Strike the Right Balance of Raw Materials.
- Break Down and Fix Your Order-to-Cash Process.
What increases operating cycle?
The following are all factors that influence the duration of the operating cycle: The payment terms extended to the company by its suppliers. The order fulfillment policy, since a higher assumed initial fulfillment rate increases the amount of inventory on hand, which increases the operating cycle.
Which of the following will increase working capital?
Some of the ways that working capital can be increased include: Earning additional profits. Issuing common stock or preferred stock for cash. Borrowing money on a long-term basis.
Why is the cash conversion cycle important to business?
Bottomline. Cash conversion cycle is an important metric for a business to determine the efficiency at which a company is able to convert its inventory into sales and then into cash.
Which is better a positive or negative cash cycle?
A positive cash cycle is preferable to a negative cash cycle. D. The cash cycle can exceed the operating cycle if the payables period is equal to zero. E. Offering early payment discounts to customers will tend to increase the cash cycle. A. The longer the cash cycle, the more likely a firm will need external financing.
Which is equal to the cash cycle but not the operating cycle?
The cash cycle plus the accounts receivable period is equal to the operating cycle. Which of these affects the length of the cash cycle but not the operating cycle? Inventory period. A. Both the accounts receivable and inventory periods. B. Accounts receivable period. C. Accounts payable period. D.
How does an increase in accounts payable shorten the cash cycle?
An increase in the accounts payable period shortens the cash cycle. II. The cash cycle is equal to the operating cycle minus the inventory period. III. A negative cash cycle is preferable to a positive cash cycle. IV. The cash cycle plus the accounts receivable period is equal to the operating cycle.
Which is the following will increase the operating cycle?
Which of the following will increase the operating cycle? I. increasing the inventory turnover rate II. increasing the payables period III. decreasing the receivable turnover rate IV. decreasing the inventory level III
