Which one of these statements concerning the cash cycle is correct?
A)The cash cycle is equal to the operating cycle minus the inventory period.
B)A negative cash cycle is actually preferable to a positive cash cycle.
C)Granting credit to slower paying customers tends to decrease the cash cycle.
D)The cash cycle plus the accounts receivable period is equal to the operating cycle.
E)The most desirable cash cycle is the one that equals zero days.

Question

Quizplus · Accepted Answer

A negative cash cycle indicates that a company receives payments from its customers before it needs to pay its suppliers, which is beneficial for its cash flow.

Which One of These Statements Concerning the Cash Cycle Is