Justification for Extending Accounts Payable Period

Hard Working Capital Management Accounts Payable Management

Company X routinely assesses its working capital management to optimize cash flow and ensure operational efficiency. Recently, they have been considering extending their accounts payable period to improve liquidity. However, this decision could have potential impacts on supplier relationships and might affect the company's purchasing terms.

Which of the following reasons would most likely justify Company X's decision to extend its accounts payable period, considering the implications on its liquidity and suppliers?

To secure additional financing from suppliers and reduce interest costs.

To take advantage of cash discounts by paying suppliers earlier.

To improve cash flow and allow for more investments in operational improvements.

Hint

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