Which one of these actions will increase the operating cycle? Assume all else held constant.
A) Decreasing the payables period
B) Decreasing the receivables turnover rate
C) Increasing the payables period
D) Decreasing the average inventory level
E) Increasing the inventory turnover rate

Question

Quizplus · Accepted Answer

Decreasing the receivables turnover rate will increase the operating cycle because it means the company takes longer to collect cash from its receivables, thus extending the time from when inventory is paid for to when cash is received from customers.

Which One of These Actions Will Increase the Operating Cycle