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Changes in the Operating Cycle Indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase,
Changes in the Operating CycleIndicate the effect that the following will have on the operating cycle. Use the letterIto indicate an increase, the letterDfor a decrease, and the letterNfor no change:
a.Average receivables goes up.
b.Credit repayment times for customers are increased.
c.Inventory turnover goes from 3 times to 6 times.
d.Payables turnover goes from 6 times to 11 times.
e.Receivables turnover goes from 7 times to 9 times.
f.Payments to suppliers are accelerated.
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