What event is most likely to have a negative impact on the Accounts Payable days and...

What event is most likely to have a negative impact on the Accounts Payable days and a positive impact on profits?

a. Supplier tightens terms.

b. Use supplier discounts.

c. Controller slows payments.

d. Interest rate increases.

Solutions

Expert Solution

When a supplier provides discounts for early repayment of account payable, this is an advantage in terms of profitability which otherwise would have to incur high interest costs. However, early repayment will have negative effects on account payable days as the cash goes out of the working capital cycle earlier.

Answer is b. Use supplier discounts

jeff jeffy answered 2 years ago

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