Asked by Emmanuella Dickson on Jul 08, 2024
Verified
An inventory turnover increase would increase the length of a firm's cash cycle? Consider each in isolation.
Inventory Turnover
A ratio indicating how many times a company has sold and replaced inventory over a specific period, showing efficiency in managing stock.
Cash Cycle
The duration between the outlay of cash for the purchase of inventory and the collection of cash from customers, reflecting the efficiency of a company's cash management.
- Examine the repercussions of credit policies on cash flow activities and the cash cycle period.
- Identify the impacts of inventory control on cash flow and business operation cycles.
Verified Answer
JV
Janet VirellaJul 13, 2024
Final Answer :
False
Explanation :
An increase in inventory turnover means a company is selling its inventory more quickly, which would decrease the length of time products sit in inventory, thereby shortening the cash cycle.
Learning Objectives
- Examine the repercussions of credit policies on cash flow activities and the cash cycle period.
- Identify the impacts of inventory control on cash flow and business operation cycles.
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