Which One of the Following Statements Concerning the Cash Cycle

question 42

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 accounts receivable 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:

Economic Outcome

The result or consequence of economic policies and actions, measured in terms of growth, employment, inflation, and other macroeconomic variables.

Society

A group of individuals who live together in an organized community with shared laws, traditions, and values.

Principal-Agent Problem

A conflict in priorities between a person or group (the agent) acting on behalf of another person or group (the principal).

Job Performance

The level of effectiveness and efficiency with which an individual completes their work tasks and responsibilities.