A Firm with a Cash Conversion Cycle of 175 Days

question 7

Multiple Choice

A firm with a cash conversion cycle of 175 days can stretch its average payment period from 30 days to 45 days. This will result in a(n )

• A) decrease of 30 days in the cash conversion cycle.
• B) increase of 15 days in the cash conversion cycle.
• C) increase of 30 days in the cash conversion cycle.
• D) decrease of 15 days in the cash conversion cycle.

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Definitions:

Upper Bound

The highest possible value or limit that a variable, function, or sequence can reach in a given context.

Market Value

The ongoing cost for buying or selling an asset or service within a market platform.

Call Option

A contractual financial agreement that provides the purchaser the option, without being compulsory, to acquire an asset at a predetermined price during a particular timeframe.

Conversion Premium

The extra amount a investor pays over the convertible security's current value to convert it into shares of stock.