If a Company Can Stretch Its Accounts Payable Without Damaging

question 98

Multiple Choice

If a company can stretch its accounts payable without damaging its credit rating, it is effectively ___________ its operating cycle.

• A) increasing
• B) reducing
• C) not affecting
• D) not able to determine.
• E) none of the above

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Definitions:

Non-current Liability

Liabilities that are not due within the next twelve months, such as long-term loans, bonds payable, and deferred tax liabilities.

Short-term Loans

Loans scheduled to be repaid in less than a year, typically used for immediate cash flow needs or small-scale expenses.

Cash Flows

Cash flows refer to the inflows and outflows of cash and cash equivalents, representing the operating, investing, and financing activities of an entity during a specific period.

Operating Activities

Activities directly related to the business’s primary operations, such as sales, costs, and expenses, impacting the company's cash flow.