Will each of the following events increase or decrease cash conversion cycle s? a. Higher financing rates

Question:

Will each of the following events increase or decrease cash conversion cycles?

a. Higher financing rates induce the firm to reduce its level of inventory.

b. The firm obtains a new line of credit that enables it to avoid stretching payables to its suppliers.

c. The firm factors its trade receivables.

d. A recession occurs and the firm's customers increasingly stretch their payables.

e. The new production process shortens the time needed to manufacture products.

Cash Conversion Cycle
Cash conversion cycle measures the total time a business takes to convert its cash on hand to produce, pay its suppliers, sell to its customers and collect cash from its customers. The process starts with purchasing of raw materials from suppliers,... Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...

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