Will each of the following events increase or decrease the cash cycle a Higher financing rates induce the firm to reduce its level of inventory b The firm obtains a new line of credit that enables it to avoid stretching payables to its suppliers c The firm factors its accounts receivable d A recess...

a Decrease The lower inventory levels will mean less cash invested in p ...

Will each of the following events increase or decrease the cash cycle? a. Higher financing rates induce

Question:

Will each of the following events increase or decrease the cash cycle?
a. Higher financing rates induce the firm to reduce its level of inventory.
b. The firm obtains a new that enables it to avoid stretching payables to its suppliers.
c. The firm factors its accounts receivable.
d. A recession occurs, and the firm's customers increasingly stretch their payables.
Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...