Margetis Inc

question 106

Multiple Choice

Margetis Inc.carries an average inventory of $750,000.Its annual sales are $10 million,its cost of goods sold is 75% of annual sales,and its receivables collection period is twice as long as its inventory conversion period.The firm buys on terms of net 30 days,and it pays on time.Its new CFO wants to decrease the cash conversion cycle by 10 days,based on a 365-day year.He believes he can reduce the average inventory to $647,260 with no effect on sales.By how much must the firm also reduce its accounts receivable to meet its goal in the reduction of its cash conversion cycle?

• A)$123,630
• B)$130,137
• C)$136,986
• D)$143,836
• E)$151,027

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Definitions:

Eliminated

Removed or gotten rid of completely.

Group Boycotts

A collective refusal by a group of businesses or individuals to deal with a particular company or person in order to pressure them or to punish them.

Per Se Violations

Actions or behaviors that are automatically deemed illegal or against regulations without the need for further demonstration of harm or intent.

Sherman Act

A landmark federal statute in the antitrust law of the United States that prohibits monopolistic practices and promotes competition.