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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

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Answer #1

An increase in which one of the following will decrease the cash cycle, all else equal?

Answer: (D) Inventory turnover rate

Note: Cash cycle is the number of days in which any entity purchase raw material, used to that raw material into making a product and collecting money by selling the product.

Inventory turnover is the number of days in which inventory of stock sold for the company.

If inventory turnover rate is increasing, then, cash collection from debtor is also increasing. Due to this, cash collection period shall be increasing and cash cyle shall be decreasing for the period.

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