Answer (C) is correct . If the cause of increased sales is an increase in the cash discount, it can be inferred that the additional customers would pay during the discount period. Thus, cash would be collected more quickly than previously and the cash conversion cycle would be shortened.
Answer (A) is incorrect because The operating cycle would decrease since the average time from cash disbursement to cash realization would be shorter.
Answer (B) is incorrect because The average collection period would decrease since the average time from cash disbursement to cash realization would be shorter.
Answer (D) is incorrect because More customers will take discounts.
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