Which One of the Following Statements Concerning the Cash Cycle

question 24

Multiple Choice

Which one of the following statements concerning the cash cycle is correct?

• A)The cash cycle is equal to the operating cycle minus the inventory period.
• B)A negative cash cycle is actually preferable to a positive cash cycle.
• C)Granting credit to slower paying customers tends to decrease the cash cycle.
• D)The cash cycle plus the trade receivables period is equal to the operating cycle.
• E)The most desirable cash cycle is the one that equals zero days.

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Definitions:

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type.

Confederation

An organization that consists of a number of parties or groups united in an alliance or league, often referring to a union of states with limited central power.

Sovereign Authority

The ultimate power or authority within a given territory, typically held by a state or monarch, over which no other power can exercise control.

Central Body

The main or primary governing agency or organization within a larger system that coordinates and regulates activities across the system.