Asiana, a fragrance manufacturer located in France, markets its products to the North American and Asian countries through indep
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Price expectations about the future is another determinant of demand.
Explanation:
For example, An increase in the expected future price of electric cars may increase current demand for electric cars.
Individuals would naturally want to stock up more of electric cars in anticipation of an increase in their prices.
The complete question is as follows:
Which one of these actions will increase the operating cycle? Assume all else held constant.
A. Increasing the payables period.
B. Decreasing the average inventory level.
C. Increasing the inventory turnover rate.
D. Decreasing the receivables turnover rate.
E Decreasing the payables period.
Answer : Which one of these actions will increase the operating cycle? Assume all else held constant.
A. Increasing the payables period.
B. Decreasing the average inventory level.
C. Increasing the inventory turnover rate.
D. Decreasing the receivables turnover rate.
E Decreasing the payables period.
Answer : D. Decreasing the receivables turnover rate.
We can calculate the operating cycle with the following formula :
Operating cycle = Days' sales of Inventory + Day Sales outstanding
In the formula above, (Net credit Sales /Average accounts receivable) is known as the accounts turnover rate. A decrease in rate means that a company is taking more time to collect its receivables from its customers than ever before. This, in turn will result in an increase in day sales outstanding and hence, increase the operating cycle.