CD Limited took out a long-term bank loan and used part of the funds to pay some of its credit suppliers early. How did this affect the trade payables turnover (days) and the return on capital employed (ROCE)? | Option | trade payables turnover (days) | return on capital employed (ROCE) |
Explanation
When CD Limited paid its credit suppliers early, it reduced its trade payables, which would decrease the trade payables turnover (days). Additionally, the early payment of credit suppliers would increase the return on capital employed (ROCE) as the company would have more cash available to invest in other assets.
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