Mycale's Has Always Paid Its Suppliers in 30 Days

question 415

Multiple Choice

Mycale's has always paid its suppliers in 30 days. The company just hired a new financial officer who is changing the policy such that suppliers will now be paid in 45 days. This change will ______
The accounts payable period and _______ the cash cycle.

• A) Increase; not affect
• B) Increase; increase
• C) Increase; decrease
• D) Decrease; increase
• E) Decrease; decrease

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Definitions:

Capital Market Security

Financial instruments like stocks and bonds that are traded in capital markets involving long-term investments.

Treasury Bill

Short-term government security issued at a discount from the face value and mature in a year or less, representing a safe investment.

Common Stock

A type of share or equity ownership in a company, giving holders voting rights and a share in the company's profits via dividends.

Securities Exchange Act

A U.S. law enacted in 1934, which governs the trading of securities, such as stocks and bonds, to protect investors and maintain fair and efficient markets.