Zervos Inc

question 8

Multiple Choice

Zervos Inc.had the following data for 2008 The new CFO believes (1) that an improved inventory management system could lower the average inventory by $4,000, (2) that improvements in the credit department could reduce receivables by $2,000, and (3) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000.Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold.If these changes were made, by how many days would the cash conversion cycle be lowered?

• A)34.0
• B)37.4
• C)41.2
• D)45.3
• E)49.8

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Definitions:

Equity

The residual interest in the assets of an entity after deducting liabilities, representing ownership interest.

Share Capital

Share capital refers to the amount of money a company has raised by issuing shares to shareholders, representing the ownership interest of the shareholders in the company.

Forfeited Shares

Shares that have been cancelled or surrendered because the shareholder failed to meet purchase requirements or payment deadlines.

Calls

Options that give the holder the right, but not the obligation, to buy a stock, bond, commodity, or other instruments at a specified price within a specific time frame.