An increase in Days Inventory Held, all other things equal, would ___________ the working capital cycle...

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Question

An increase in Days Inventory Held, all other things equal, would ___________ the working capital cycle...

An increase in Days Inventory Held, all other things equal, would ___________ the working capital cycle and reflect ________________ liquidity

		decrease; increased
		decrease; decreased
		increase; decreased
		increase; increased

business finance

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Answer 1

Answer #1

Answer is “increase; decreased”

Working Capital Cycle = Days Receivable Received + Days Inventory Held - Days Payable Paid

If days inventory held increase, then it would increase working capital cycle. If the company is taking longer period to convert its inventory into sale, then it will decrease the liquidity of the company.

An increase in Days Inventory Held, all other things equal, would increase the working capital cycle and reflect decreased liquidity.

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Answer 2

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An increase in Days Inventory Held, all other things equal, would ___________ the working capital cycle...

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An increase in Days Inventory Held, all other things equal, would ___________ the working capital cycle...