operating cycle

CFA Level I
#1

a company extends its trade credit terms by four days to all its customers. the most likely affect of this change to the company credit’s customer is a four day:

a) decrease in the company’s net operating cycle

b) decrease inthe company’s operating cycle

c) increase in the company operating cycle.

the asnwer is A… i thought the answer would be B since DSO went up, operating cycle would go up too?

#2

it’s asking about the effect of this extention on the Net operating cycle of your customers not on your Net operating cycle, consequently, From your customers’ standpoint Net operating Cycle Will decrease because of the increase in their Days of Payables.

#3

oooo i see. thanks