Question

An increase in the average payment period will result in ______ in the operating cycle and...

An increase in the average payment period will result in ______ in the operating cycle and _____ in the cash conversion cycle.

a. an increase, a decrease

b. a decrease, a decrease

c. a decrease, no change

d. no change, a decrease

Please explain your logic.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer - Option A

Increase , decrease

Increase in payment cycle will mean that we will make the payments after greater period of time and this will increase our operating cycle , we will take more time for goods to produce as compared to earlier period. If production will be late , sales will be delayed and money conversion will also be delayed. Hence option A will be correct. Shorter payment period ensures quick cash conversion as a result of short operating cycle.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Hatfield donuts limited has an average payment period of 40 days, an average Collection period of...
Hatfield donuts limited has an average payment period of 40 days, an average Collection period of 50 days, and turns its inventory around 10 times per year if management is able to change its average collection period favorable by 9 days. Calculate the new cash conversion cycle
A firm’s average age of inventory is 80 days, the average collection period is 50 days....
A firm’s average age of inventory is 80 days, the average collection period is 50 days. a.       With average payment period of 70 days, compute Cash Conversion Cycle (CCC). b.       Explain whether the CCC should be lengthened or shortened.
Which of the following methods can be used to improve the firm’s cash conversion cycle? Increase...
Which of the following methods can be used to improve the firm’s cash conversion cycle? Increase the firm’s inventory conversion cycle. Decrease the firm’s receivables collection period. Decrease the firm’s payables deferral period.
An increase in which one of the following will decrease the cash cycle, all else equal?...
An increase in which one of the following will decrease the cash cycle, all else equal? A. Payables turnover B. Days sales in inventory C. Operating cycle D. Inventory turnover rate E. Accounts receivable period
Camp Manufacturing turns over its inventory 5 times each? year, has an average payment period of...
Camp Manufacturing turns over its inventory 5 times each? year, has an average payment period of 32 ?days, and has an average collection period of 59 days. The firm has annual sales of ?$3.3 million and cost of goods sold of ?$2.3 million.???(Use a? 365-day year.) a.??Calculate the? firm's operating cycle and cash conversion cycle. b.??What is the dollar value of inventory held by the? firm? c.??If the firm could reduce the average age of its inventory from 73 days...
The cash cycle is the difference between the: Select one: a. operating cycle and accounts payable...
The cash cycle is the difference between the: Select one: a. operating cycle and accounts payable period b. accounts payable and accounts receivable period c. operating cycle and accounts receivable period d. operating cycle and activity cycle
Cash Conversion Cycle: American Products is concerned about managing cash efficiently. On average, inventories have an...
Cash Conversion Cycle: American Products is concerned about managing cash efficiently. On average, inventories have an age of 80 days, and accounts receivable are collected in 40 days. Accounts payable are paid approximately 30 days after they arise. The firm has annual sales of about $30 million. Goods sold total $20 million, and purchases are $15 million. a) Calculate the firm's operating cycle b) Calculate the firm's cash conversion cycle c) Calculate the amount of resources needed to support the...
4- Interior Designs has a days sales in inventory of 51 days, an average payment period...
4- Interior Designs has a days sales in inventory of 51 days, an average payment period of 38 days, and an average collection period of 32 days. Management is considering an offer from their suppliers to pay within 10 days and receive a 2 percent discount. If the new discount is taken, the average payment period is expected to decline by 26 days. If the new discount is taken, the operating cycle will be _____ days. If new discount is...
Cash Conversion Cycle. Calculate the (a) accounts receivable period, (b) accounts payable period, (c) inventory period,...
Cash Conversion Cycle. Calculate the (a) accounts receivable period, (b) accounts payable period, (c) inventory period, and (d) cash conversion cycle for the following firm: Income Statement Data:             Sales                            5,000             Cost of goods sold      4,200             Balance sheet data: Beginning of Year End of Year Inventory 500 600 Accounts receivable 100 120 Accounts payable 250 290 Calculate the accounts receivable period: Response (show formula and numerical values): Calculate the accounts payable period Response (show formula and numerical values):...
Cash Conversion Cycle Negus Enterprises has an inventory conversion period of 60 days, an average collection...
Cash Conversion Cycle Negus Enterprises has an inventory conversion period of 60 days, an average collection period of 48 days, and a payables deferral period of 27 days. Assume that cost of goods sold is 80% of sales. Assume a 365-day year. Do not round intermediate calculations. What is the length of the firm's cash conversion cycle? Round your answer to the nearest whole number. ___days If annual sales are $4,124,500 and all sales are on credit, what is the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT