Changes in the Operating Cycle indicate the effect that the following will have on the operating cycle.

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Changes in the Operating Cycle indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase, the letter D for a decrease, and the letter N for no change:

a. Average receivables goes up.

b. Credit repayment time for customers is increased.

c. Inventory turnover goes from 3 times to 6 times.

d. Payables turnover goes from 6 times to 11 times.

e. Receivables turnover goes from 7 times to 9 times.

f. Payments to supplies are accelerated.

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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th Edition

Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan

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