The action which will decrease the operating cycle is:
C. Decreasing the inventory turnover rate
The amount of time it takes a business to purchase goods, sell them, and make money from those sales is referred to as an operating cycle. To put it another way, it is the amount of time it takes for a company to turn its inventory into cash. The industry determines the length of an operating cycle.
The operating cycle is crucial because it can tell a company owner how quickly inventory can be sold. Simply put, it determines the efficiency of the business.
A shorter operating cycle is preferable because it indicates that the business possesses sufficient cash to continue operations, recuperate investments, and fulfill various obligations. On the other hand, if a company has a longer operating cycle, it means that it needs more cash to keep running.
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