Which of the Following Will Increase the Cash Cycle,all Else

question 38

Multiple Choice

Which of the following will increase the cash cycle,all else constant?
I.increasing the inventory period
II.decreasing the accounts receivable turnover rate
III.increasing the accounts payable period
IV.decreasing the accounts receivable period

• A)I and II only
• B)III and IV only
• C)I and IV only
• D)I, II, and III only
• E)I, III, and IV only

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Definitions:

Spot Rate

The current exchange rate at which a currency can be bought or sold for immediate delivery.

Settlement Date

The date on which a trade is finalized, and the buyer must make payment and the seller deliver the asset.

Fair Value Hedge

A type of hedge that aims to offset changes in the fair value of an asset or liability or an unrecognized firm commitment.

Forward Contract

An agreement to buy or sell an asset at a future date at a price agreed upon today, often used to hedge against price movements.