How could Katz improve its cash-to-cash (C2C) cycle if all other factors stay constant?

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To improve the cash-to-cash (C2C) cycle, increasing weeks payable can be beneficial because it extends the time a company takes to pay its suppliers. This extension allows the company to keep cash longer, which effectively shortens the overall cash-to-cash cycle.

The C2C cycle measures how long it takes for a company to convert its investments in inventory and accounts receivable back into cash. The cycle consists of three key components: days inventory outstanding (the time inventory is held), days sales outstanding (the time it takes to collect cash from sales), and days payable outstanding (the time taken to pay suppliers). Increasing weeks payable translates to higher days payable outstanding, which means that the company can retain cash from sales longer before it has to settle its obligations to suppliers.

Thus, by extending the payment terms without negatively impacting relationships with suppliers or facing penalties, Katz can effectively enhance its liquidity and improve the cash-to-cash cycle, keeping cash on hand or using it for other operational needs until it must settle its payables.

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