(Solved): The longer the cash cycle, the more likely a firm will need external financing. Increasing the acc ...

The longer the cash cycle, the more likely a firm will need external financing. Increasing the accounts payable period increases the cash cycle. A positive cash cycle is preferable to a negative cash cycle. The cash cycle can exceed the operating cycle if the payables period is equal to zero. Adopting a more liberal accounts receivable policy will tend to decrease the cash cycle.