Chapter 16, Problem 6CTCR

Summary Introduction

To discuss: The impact that changes in payable policy had on BS’s operating cycle.

Introduction:

Operating cycle:

The phase, which takes time to complete the process from an initial outlay of cash to produce, sell, and receive money from customers is termed as operatingcycle.

The formula to calculate operating cycle:

$\text{Operating cycle}=\text{Inventory period}+\text{Accounts receivable period}$

Summary Introduction

To discuss: The impact on change of increasing the payable policy on cash cycle of BS Airline.

Introduction:

Cash cycle:

The phase, which takes time to complete the process between the cash disbursement and cash collection, is termed as cash cycle.

The formula to calculate cash:

$\text{Cash cycle}=\text{Operating cycle}-\text{Accounts payable period}$