Question - Blue sky airline announced that it would stretch out its bill payments to 45days from 30 days. The reason given was that the company wanted to control costs and optimize cash flow. The increased payables period will be in effect for all of the company's 4,000 suppliers.
a) What impact did thus change in payables policy have on blueskys operating cycle? Its cash cycle?
b) What impact did the announcement have on bluesky's suppliers?
c) Why don't all firms simply increase their payables periods to shorten their cash cycles?
d) Bluesky lengthened its payables period to "control costs and optomize cash flow" exactly what is the cash benefit to bluesky from this change?