📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

  • google app store apple app store
  • âś–

      Question

      Offering a cash discount to customers for early payment

      of their invoices will likely:
      A Increase the average collection period. Correct Answer Incorrect Answer
      B Have no impact on the cash conversion cycle. Correct Answer Incorrect Answer
      C Shorten the cash conversion cycle. Correct Answer Incorrect Answer
      D Increase bad debts. Correct Answer Incorrect Answer

      Solution

      A cash discount incentivizes customers to pay their bills sooner. This reduces the Days Sales Outstanding (DSO), which is a component of the Cash Conversion Cycle (CCC). A lower DSO leads to a shorter CCC, meaning cash is collected faster.

      Practice Next
      ask-question