The Operating Cycle Will Decrease If You Decrease The

question 65

Multiple Choice

The operating cycle will decrease if you decrease the:

• A)days sales in inventory.
• B)days in accounts payable.
• C)cash cycle by increasing the accounts payable period.
• D)accounts receivable turnover rate.
• E)speed at which inventory is sold.

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Definitions:

Indirect Method

A technique for preparing the cash flow statement in which net income is adjusted for non-cash transactions and changes in working capital to reflect cash flow from operating activities.

Net Income

The total earnings of a company after deducting all costs and expenses from revenue.

Operating Activities

Activities that relate directly to the operation of the company's business, such as selling products or services, and are reflected in the company's cash flow.

Net Cash Flow

The amount of cash that is generated or lost over a specific period of time, after accounting for all cash inflows and outflows.