Assume All Sales and Purchases Are on Credit

question 7

Multiple Choice

Assume all sales and purchases are on credit.Which one of the following statements is correct concerning the cash cycle?

• A)The cash cycle starts when inventory is purchased.
• B)The longer the cash cycle,the more likely a firm will need external financing.
• C)Increasing the accounts payable period increases the cash cycle.
• D)The cash cycle can exceed the operating cycle if the payables period is equal to zero.
• E)Adopting a more liberal accounts receivable policy will tend to decrease the cash cycle.

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Definitions:

Improve Operations

Strategies or actions undertaken to enhance the efficiency, effectiveness, and quality of business operations.

Operations Decisions

The strategic decisions of OM are goods and service design, quality, process and capacity design, location selection, layout design, human resources and job design, supply chain management, inventory, scheduling, and maintenance.

Goods and Services

Products and activities that fulfill the needs or wants of consumers, with goods being tangible items and services being intangible offerings.

Operations Strategies

Plans and policies designed to achieve the efficient and effective production and distribution of a company's products or services.