Which One of the Following Will Decrease the Operating Cycle

question 122

Multiple Choice

Which one of the following will decrease the operating cycle?

• A) An easing of the accounts receivable collection policy.
• B) Additional inventories are kept on hand.
• C) The customer discount for early payment is discontinued.
• D) Suppliers offer a bonus discount for early payment.
• E) The inventory turnover changes from 9 to 10.

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Definitions:

Price Elasticity

An indication of the extent to which the demand or supply of a product alters following a variation in its price.

Substitutes

Products or services that can be used in place of each other, where the increase in price of one leads to an increase in demand for the other.

Complements

Items or services used together, where the use of one increases the demand for the other.

Consumer Surplus

The variance between the aggregate amount consumers intend and can afford to pay for a good or service and the total they actually do pay.