A Firm Has a Working Capital Cycle of 170 Days

question 13

Multiple Choice

A firm has a working capital cycle of 170 days, an average payment period of 50 days, and an inventory conversion period of 145 days. The firm's average collection period is days.

• A) 95
• B) 120
• C) 75
• D) 25

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Definitions:

Step-Variable Cost

A cost that remains constant for a certain level of activity, but changes in step fashion once a certain threshold is surpassed.

Activity

An event that causes the consumption of overhead resources.

Variable Cost Per Unit

The cost that varies with the level of output, computed on a per-unit basis.

Fixed Cost

A fixed cost is a business expense that remains constant regardless of changes in production levels or sales volumes.