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Question 2 In May 2019, a public listed company SSK Corporation told its 1,000 suppliers that it would stretch out its bill p

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When bill payments will be stretched out from 30 days to 40 days, it will mean that payables period will be stretching out and it will be having a positive implication for the operating cycle when it is taking in regardance with cash conversion cycle because it will leave the company with more cash in hands as it will have more time to pay its creditors.

When the payables outstanding are increasing it will mean that company is trying to take additional time from the suppliers and it is trying to have enough liquidity in its hands and it will be increasing the cash conversion cycle of the company.

This will be helpful in order to stretch the liquidity of the company and it will also help the company in having a better cash conversion cycle as the payables period has increased and company will take more time for payment of the supplier so this will be helping in order to boost the current ratio and the liquidity ratio of the company and effectiveness in payment of debt periodic repayment.

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