Which one of the following statements is correct concerning the cash cycle?

Multiple Choice

• The longer the cash cycle, the more likely a firm will need external financing.

• Increasing the accounts payable period, increases the cash cycle.

• A positive cash cycle is preferable to a negative cash cycle.

• The cash cycle can exceed the operating cycle if the payables period is equal to zero.

• Adopting a more liberal accounts receivable policy will tend to decrease the cash cycle.