Use the table for the question(s)below.
Luther Enterprises Ltd had sales of $850 million and a cost of goods sold of $500 million in 2016.
A simplified balance sheet for the firm appears below:
-Which of the following would decrease a firm's cash conversion cycle?
A)increase the accounts payable days
B)increase the accounts receivable days
C)increase the inventory days
D)increase the cash days

Question

Use the table for the question(s)below.
Luther Enterprises Ltd had sales of $850 million and a cost of goods sold of $500 million in 2016.
A simplified balance sheet for the firm appears below:  
-Which of the following would decrease a firm's cash conversion cycle?
A)increase the accounts payable days 
B)increase the accounts receivable days 
C)increase the inventory days 
D)increase the cash days

Quizplus · Accepted Answer

Increasing the accounts payable days will increase the amount of time a firm has to pay its suppliers, thus increasing the amount of time it can hold onto its cash before making necessary payments. This will decrease the cash conversion cycle. Increasing accounts receivable days, inventory days, or cash days will all increase the cash conversion cycle.

Use the Table for the Question(s)below