Other factors remaining constant, an increase in the average payment period will result in ________.
A) a decrease in the average collection period
B) a decrease in the cash conversion cycle
C) an increase in the cash conversion cycle
D) an increase in the average collection period

Question

Quizplus · Accepted Answer

An increase in the average payment period means the company is taking longer to pay its suppliers, which effectively reduces the cash conversion cycle, as it delays cash outflows.

Other Factors Remaining Constant, an Increase in the Average Payment