The Operating Cycle Can Be Decreased By

question 1

Multiple Choice

The operating cycle can be decreased by:

• A)paying accounts payable faster.
• B)discontinuing the discount given for early payment of an accounts receivable.
• C)decreasing the inventory turnover rate.
• D)collecting accounts receivable faster.
• E)increasing the accounts payable turnover rate.

---

Definitions:

Public Company Accounting Oversight Board

A regulatory body established by Congress to oversee the audits of public companies in order to protect investors and the public interest.

Return on Assets Ratio

An indicator of how profitable a company is relative to its total assets, measuring the efficiency of asset use.

Operating Income

The income produced from the normal operations of a company, subtracting operating expenses from gross profit.

Average Total Assets

A measure used to evaluate a company's efficiency and profitability, calculated by averaging the total assets at the beginning and end of an accounting period.