Question: While analysing 5 - Stars Pty Ltd . s financial statements, you note that accounts payable days decreased from 6 2 days in 2 0

While analysing 5-Stars Pty Ltd.s financial statements, you note that accounts payable days decreased from 62 days in 20Y2 to 50 days in 20Y3. Management explained that one of their major suppliers considerably tightened its credit terms because of slow payments. Now the business is looking for new suppliers with more favourable terms, because the current situation creates cash flow pressure. Is this change temporary, and is managements explanation reasonable?
The accounts payable change is temporary, and the provided explanation is reasonable.
The accounts payable change is permanent, and the provided explanation is reasonable.
The accounts payable change is temporary, but is most likely caused by factors other than those given by management.

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