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Increasing the use of accounts payable is favorable to the company because _____ a
Increasing the use of accounts payable is favorable to the company because _____ a. it shifts the cost of holding inventory for under 30 days to the vendor b. it lengthens the cash conversion cycle c. it allows the company to increase working capital d. it is offset by an increase in accounts receivable
Expert Solution
Option a is incorrect option because inventory holding costs begin as soon as the good is purchased and stored.
Option b is incorrect option, Increasing account payable is favourable to the company because it increase cash flow of company. It reduces cash conversion cycle.
Option c is incorrect as increase in account payable increases current liabilities and reduces net working capital.
Option d is correct option,
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