A company currently has a 51 day cash cycle. Assume the firm changes its operations such that it decreases its receivables period by 2 days, increases its inventory period by 3 days, and increases its payables period by 4 days. What will the length of the cash cycle be after these changes? A) 42 days
B) 45 days
C) 48 days
D) 49 days
E) 51 days

E) 51 days

Explanation:

Calculation of length of the cash cycle after the changes.

As given:

Current cash cycle = 51 days.

Decreases its receivables period by 3 days

Increases its inventory period by 4 days.

Increases its payables period by 1 day.

Hence,

Cash cycle = 51 days - 3 days + 4 days- 1 day

Cash cycle = 51 day

Therefore the cash cycle after the changes will be 51 days

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