2. 4. Changes in cycles [LO 18.1] Indicate the impact of the following on the cash and...
Question:
2. 4.
Changes in cycles [LO 18.1] Indicate the impact of the following on the cash and operating cycles, respectively. Use the letter I to indicate an increase, the letter D for a decrease and the letter N for no change:
1. The terms of cash discounts offered to customers are made less favourable.
2. The cash discounts offered by suppliers are increased; thus, payments are made earlier.
3. An increased number of customers begin to pay in cash instead of with credit.
4. Fewer raw materials than usual are purchased.
5. A greater percentage of raw material purchases are paid for with credit.
6. More finished goods are produced for inventory instead of for order.
Step by Step Answer:
Fundamentals Of Corporate Finance
ISBN: 9781743768051
8th Edition
Authors: Stephen A. Ross, Rowan Trayler, Charles Koh, Gerhard Hambusch, Kristoffer Glover, Randolph W. Westerfield, Bradford D. Jordan