Data on Wentz Inc

question 90

Multiple Choice

Data on Wentz Inc. for 2011 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.

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

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Definitions:

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, typically represented by the yield on government bonds like U.S. Treasury securities.

Semistrong Efficient

A form of market efficiency that states all public information is already calculated into stock prices, and thus, no one can achieve higher returns by trading on that information.

Expected Returns

The anticipated return on an investment, taking into account all known risks and rewards associated with it.

Equilibrium

A condition or state in which economic forces are balanced, such as when supply equals demand in a market.