If a Firm Has a Cash Cycle of 41 Days

question 24

Multiple Choice

If a firm has a cash cycle of 41 days and an operating cycle of 76 days, what is its average payment period?

• A) 52 days
• B) 29 days
• C) 117 days
• D) 35 days

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Definitions:

Employee Salaries

The monetary compensation paid to employees for their labor, typically on a monthly or yearly basis.

Net Operating Income

The total profit of a company after operating expenses are subtracted from gross profit, but before income taxes and interest are deducted.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity levels, allowing for more accurate budgeting in variable cost areas.

Spending Variance

The difference between the actual spending and the budgeted or planned amount, often examined to manage and control expenses.