The Wall Street Journal reported on April 17, 2013 that many companies such as consumer products giant Proctor Gamble are delaying the payment of their accounts payable in order to free up cash for other corporate uses The new policy stretches payment terms from 45 to 75 days REQUIRED a How will th...

a The results from the policy shift will affect the balance sheet with higher Accounts Payable balan ...

The Wall Street Journal reported on April 17, 2013 that many companies such as consumer products giant

Question:

The Wall Street Journal reported on April 17, 2013 that many companies such as consumer products giant Proctor & Gamble are delaying the payment of their in order to free up cash for other corporate uses. The new policy stretches payment terms from 45 to 75 days.

REQUIRED:
a. How will this change in policy be reflected on P&G’s and the operating section of the statement of cash flows?
b. Which financial ratio discussed earlier in the text would reflect this change in policy?
c. Explain how delaying these payments will affect P&G’s cash position.
d. Discuss some of the tradeoffs P&G management likely considered when changing this policy.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...