Gaston Piston Corp

question 15

Multiple Choice

Gaston Piston Corp. has annual sales of $50,735,000 and maintains an average inventory level of $15,012,000. The average accounts receivable balance outstanding is $10,008,000. The company makes all purchases on credit and has always paid on the 30th day. The company is now going to take full advantage of trade credit and pay its suppliers on the 40th day. If sales can be maintained at existing levels but inventory can be lowered by $1,946,000 and accounts receivable lowered by $1,946,000, what will be the net change in the cash conversion cycle? (Assume there are 365 days in the year.)

• A) -14.0 days
• B) -18.8 days
• C) -28.0 days
• D) -25.6 days
• E) -38.0 days

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Definitions:

Demographics

Statistical data relating to the population and particular groups within it, often used in marketing to segment markets by age, gender, income level, and other attributes.

Consumer Behaviour

The study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences.

Demographics

Statistical data related to the characteristics of a population, such as age, gender, income, and education.

Psychographics

The analysis and grouping of individuals according to psychological characteristics like their desires and viewpoints, chiefly applied in marketing studies.