Which of the following actions would reduce a company's cash lag?
A)Extending the length of credit offered to customers.
B)Extending the amount of time it takes to pay suppliers.
C)Selling inventory more quickly.
D)Decreasing the gross margin percentage.

Question

Quizplus · Accepted Answer

Selling inventory more quickly would reduce a company's cash lag by increasing the frequency of cash inflows. Extending the length of credit offered to customers and decreasing the gross margin percentage would increase the cash lag, while extending the amount of time it takes to pay suppliers would have no effect on the cash lag.

Which of the Following Actions Would Reduce a Company's Cash