CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

A company extends its trade credit terms by four days to all its credit customers. The most likely effect of this change to the company's credit customers is a four day ______.
A. increase in their operating cycle
B. decrease in their operating cycle
C. decrease in their net operating cycle
Explanation: A four day increase in payables will reduce the cash conversion cycle (net operating cycle) by four days.

User Contributed Comments 6

User Comment
Jpsmith835 Is a 'credit customer' not a receivable?
tomalot It's a receivable to you and a payable for your customer. Q is asked from their perspective
namuhama ouch,,, need to carefully read the question..
gradyf Different between operating and net operating cycle is....?
nmech1984 Oper = InvDays + RecDays
NetOper = Oper - PayabD
MathLoser OMG I didn't read the question properly.
It's about the company of the customers, not my company.
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