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:

FVE Method

An accounting technique where assets and liabilities are valued and reported at their fair value for financial reporting purposes.

Cost Method

An accounting method for investment, where the investment is recorded at cost and is adjusted for dividends received, rather than market value fluctuations.

Investment Account

An account held at a financial institution that contains securities, cash, and other investments owned by the account holder.

Net Income

The profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.