Data on Wentz Inc

question 38

Multiple Choice

Data on Wentz Inc. for 2012 are shown below, along with the payables deferral period (PDP) for the firms against which it benchmarks. The firm's new CFO believes that the company could delay payments enough to increase its PDP to the benchmarks' average. If this were done, by how much would payables increase? Use a 365-day year.

Cost of goods sold = $75,000
Payables = $5,000
Payables deferral period (PDP) = 24.33
Benchmark payables deferral period = 30.00

• A) $ 764
• B) $ 849
• C) $ 943
• D) $1,048
• E) $1,164

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Definitions:

Expected Population

An estimation of a population size in the future based on current trends and changes.

GIC

Guaranteed Investment Certificate, a type of Canadian investment that offers a guaranteed rate of return over a fixed period.

Maturity Value

The total amount of principal and interest due to be paid at the end of a loan or investment period.

Compounded Semi-annually

Interest that is calculated and added to the principal amount twice a year, leading to interest being earned on interest.