If You Delay Paying Your Suppliers by an Additional Ten

question 1

Multiple Choice

If you delay paying your suppliers by an additional ten days,then:

• A) your payables turnover rate will increase.
• B) you will require less bank financing of your operations.
• C) the cash cycle will increase by ten days.
• D) your operating cycle will lengthen by ten days.
• E) your stock-out costs will risE.

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Definitions:

Discount Rate

In discounted cash flow analysis, this interest rate is crucial for deducing the present monetary value of cash inflows expected in future periods.

Net Present Value

The difference between the present value of cash inflows and outflows over a period, used to assess the profitability of an investment.

Working Capital

The disparity between a business's immediate assets and liabilities, showcasing its liquidity and financial stability in the short-term.

Salvage Value

The estimated resale value of an asset at the end of its useful life, considered in depreciation calculations and asset disposal decisions.