- CFA Exams
- CFA Level I Exam
- Study Session 9. Financial Reporting and Analysis (4)
- Reading 29. Financial Reporting Quality
- Subject 4. Detection of Financial Reporting Quality Issues
CFA Practice Question
How does increasing the measure of days sales in payables (DSP) affect operating and financing cash flows?
Operating | Financing
A. Increase | No impact
B. No impact | Increase
C. Decrease | Increase
Explanation: A larger DSP will increase operating cash flow.
User Contributed Comments 4
| User | Comment |
|---|---|
| mickys | can someone clari? |
| Profache | Increasing the DSP delays payment to suppliers, which increases operating cash flow. Payment to suppliers (accounts payable) is an operating activity, not financing. |
| birdperson | basically, increase A/P --> increases CFO |
| birdperson | and I should add, no impact to CFF |