If a Firm Has a Cash Cycle of 55 Days

question 91

Multiple Choice

If a firm has a cash cycle of 55 days and an operating cycle of 150 days, what is its payables turnover?

• A) 9.50
• B) 6.64
• C) 3.84
• D) 2.60

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Definitions:

Salvage Value

The estimated value that an asset will realize upon its sale at the end of its useful life.

Sunk Cost

Expenses that have already been incurred and cannot be recovered, and should not affect future business decisions.

Net Present Value

Net Present Value (NPV) is a financial metric that calculates the value of a series of cash flows by discounting them back to the present-day using a specific discount rate.

Electronic Transmission

The process of transferring data or documents over electronic networks, such as the internet or email.