ACCA · Question 10 · Interpretation of Financial Statements
Section A
ConsultCo, a management consultancy firm, has a receivables collection period of 45 days, a payables payment period of 30 days, and zero inventory. If ConsultCo manages to negotiate an extension of its payables payment period to 40 days without affecting its receivables, what will be the impact on its working capital cycle?
Answer options:
The working capital cycle will increase by 10 days.
The working capital cycle will decrease by 10 days.
The working capital cycle will remain unchanged.
The working capital cycle will decrease by 40 days.
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