Multiple Choice
Pascarella Inc.is revising its payables policy.It has annual sales of $50,735,000,an average inventory level of $15,012,000,and average accounts receivable of $10,008,000.The firm's cost of goods sold is 85% of sales.The company makes all purchases on credit and has always paid on the 30th day.However,it now plans to take full advantage of trade credit and to pay its suppliers on the 40th day.The CFO also believes that sales can be maintained at the existing level but inventory can be lowered by $1,946,000 and accounts receivable by $1,946,000.What will be the net change in the cash conversion cycle,assuming a 365-day year?
A) -26.6 days
B) -29.5 days
C) -32.8 days
D) -36.4 days
E) -40.5 days
Correct Answer:
Verified
Correct Answer:
Verified
Q14: Net working capital, defined as current assets
Q21: Short-term financing is riskier than long-term financing
Q23: The maturity of most bank loans is
Q24: A line of credit can be either
Q26: For a firm that makes heavy use
Q27: The average accounts receivable balance is a
Q31: Setting up a lockbox arrangement is one
Q91: Taylor Textbooks Inc.buys on terms of 2/15,net
Q95: Which of the following statements is CORRECT?<br>A)
Q116: If a firm takes actions that reduce