Question: Please answer these questions. 1. Is it possible for a firm's cash cycle to be longer than its operating cycle? Explain why or why not?
Please answer these questions.
1. Is it possible for a firm's cash cycle to be longer than its operating cycle? Explain why or why not? Suppose you are working as a Payables Manager on Amazon.com. Last month, you changed the payable policy i.e., stretched out the bill payment to 60 days from 45 days arguing that this new policy would help to "control costs and optimize cash flow." This extended payable period is in effect for all of the company's 2000 suppliers. 2. What impact did this change in payables policy have on Amazon's operating cycle, its cash cycle, its suppliers? 3. Do you think it is ethical for large firms to unilaterally increase their payables periods, specifically when dealing with smaller suppliers? 4. Assume that increasing payables periods would shorten the cash cycle, so why don't all firms increase their payables periods? 5. You stated that the new policy would help Amazon to control costs and optimize cash flow." Exactly what is the cash benefit to Amazon from this change
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