A large retailer such as Walmart possesses power over smaller suppliers. In theory, Walmart could force these suppliers to sell on payment terms that were well beyond a typical industry norm. How would this impact Walmart’s cash cycle? How would this impact the suppliers’ cycle? Are there any ethical issues involved in such a practice?

Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter6: Accounting Quality
Section: Chapter Questions
Problem 15QE
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A large retailer such as Walmart possesses power over smaller suppliers. In theory, Walmart could force these suppliers to sell on payment terms that were well beyond a typical industry norm.

  1. How would this impact Walmart’s cash cycle?
  2. How would this impact the suppliers’ cycle?
  3. Are there any ethical issues involved in such a practice?
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