Which of the Following Will Decrease the Operating Cycle

question 114

Multiple Choice

Which of the following will decrease the operating cycle?

• A) The cash cycle decreases.
• B) The days' sales in inventory decreases by 3 days but the average collection period increases by 2 days.
• C) The average payment period increases.
• D) All of these will decrease the operating cycle.

---

Definitions:

Cash Receipts

The collection of cash, typically from sales, services, or other forms of income.

Accounts Receivable

Accounts receivable represents money owed to a company by its customers for goods or services delivered but not yet paid for.

Anticipated Cash Inflow

Expected or forecasted cash receipts from operations, investments, and financing activities within a future period.

Credit Sales

Transactions where goods or services are sold and payment is deferred, resulting in accounts receivable for the seller until the buyer pays at a later date.