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 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 this change in policy be reflected on P&G’s balance sheet 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.



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  • CreatedAugust 19, 2014
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