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Last month, BS Airline announced that it would stretch out its bill payments to 45 days 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 this change in payables policy have on BS‘s operating cycle? Its cash cycle? b) What impact did the announcement have on BS‘s suppliers? c) Is it ethical for large firms to unilaterally lengthen their payables periods, particularly when dealing with smaller suppliers? d) Why don‘t all firms simply increase their payables periods to shorten their cash cycles?
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