Helena Furnishings Wants to Reduce Its Cash Conversion Cycle

question 82

Multiple Choice

Helena Furnishings wants to reduce its cash conversion cycle. Which of the following actions should it take?

• A) Increase average inventory without increasing sales.
• B) Take steps to reduce the DSO.
• C) Start paying its bills sooner, which would reduce the average accounts payable but not affect sales.
• D) Sell common stock to retire long-term bonds.
• E) Sell an issue of long-term bonds and use the proceeds to buy back some of its common stock.

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Definitions:

Unemployment

The situation where individuals who are capable of working and are actively seeking work are unable to find employment.

Inflation

The velocity at which the broad price tags for products and services surge, weakening the power to purchase.

Cyclical Unemployment

Unemployment that results from economic downturns or recessions, reflecting a lack of demand for goods and services.

Steel Industry

A sector of the economy that produces steel, a key material used in construction, transportation, and manufacturing.