Answered step by step
Verified Expert Solution
Question
1 Approved Answer
5.15 Is it possible for a firm's cash cycle to be longerthan its operating cycle? Explain why or why not.Use the following info to answer
5.15 Is it possible for a firm's cash cycle to be longerthan its operating cycle? Explain why or why not.Use the following
info to answer following 5 questions.
In April 1994 Ameritech Corporation. one
al the "Baby Ebell phonecompanies, told its 70,000suppliers that it would stretch out its bill payments to 45 days from 30 days beginning on May I. The reasongiven was "to control costs and optimize cash flow.
5.16 What impact did this change in payables policyhave on Ameritech's operating eycle? Its cash cycle?
5.17What impact did the announcement have onAmeritech's suppliers?
5.18 Is it ethical for large firms to unilaterally lengthen theirpayables periods, particularly when dealing with smaller
suppliers?
5.19 Why don't all firms simply increase their payables periods toshorten their cash cycles?
5.20 Ameritech lengthened its payables period to "control costsund optimize cash flow," Exactly what is the cash benefit to
Ameritech from thischange
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started