Thank you for visiting The Fried Green Tomatoes Restaurant has increased its operating cycle from 97 8 days to 102 4 days while the cash cycle has decreased by. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
The correct answer is option B. As the operating cycle expanded and the cash cycle decreased, the accounts payable period expanded by 4.6 days.
How have these changes affected the accounts payable period?
To decide the impact of the changes within the operating cycle and cash cycle on the accounts payable period, we got to consider their relationship.
The accounts payable period represents the time it takes for a company to pay its providers for merchandise or administrations acquired on credit.
When the operating cycle increments, it implies that the time taken to convert stock into cash has stretched. On the other hand, a decrease within the cash cycle shows that the time taken to change over cash investments into cash inflows has reduced.
Given that the operating cycle has expanded and the cash cycle has decreased, ready to induce that the accounts payable period will likely increase.
Usually, since the company presently takes longer to produce cash from stock sales whereas requiring less time to change over cash ventures into cash inflows.
Hence, the proper reply is an Increment of 4.6 days.
Learn more about the accounts payable period here:
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