A Firm Has an Average Age of Inventory of 20

question 18

Multiple Choice

A firm has an average age of inventory of 20 days, an average collection period of 30 days, and an average payment period of 60 days. The firm's cash conversion cycle is_________ days.

• A) 50
• B) 110
• C) 70
• D) -10

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Definitions:

Employees

Individuals hired by a business or organization to perform work in exchange for compensation.

FICA Taxes

Taxes imposed on both employers and employees to fund Social Security and Medicare in the United States.

Retirement Benefits

Payments or other benefits provided to employees after they retire, such as pensions or health insurance.

FICA-OASDI

Federal Insurance Contributions Act - Old Age, Survivors, and Disability Insurance, the tax withholding that funds Social Security and Medicare.