Indicate the impact of the following on the cash and operating cycles, respectively. Use the letter I
Question:
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.
(a) The terms of cash discounts offered to customers are made less favourable.
(b) The cash discounts offered by suppliers are increased; thus, payments are made earlier.
(c) An increased number of customers begin to pay in cash instead of with credit.
(d) Fewer raw materials than usual are purchased.
(e) A greater percentage of raw material purchases are purchased on credit.
(f) More finished goods are produced for inventory instead of for order.
Step by Step Answer:
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe