A Firm Has a Cash Conversion Cycle of 60 Days

question 244

Multiple Choice

A firm has a cash conversion cycle of 60 days and average collection period of 40 days. The firm'soperating cycle is__________ days.

• A) 20
• B) 50
• C) 100
• D) cannot be determined

---

Definitions:

Credit Limitations

Restrictions that cap the amount of credit that can be extended to a borrower by a lender.

Refundable Tax Credit

A tax credit that can reduce the taxpayer's liability to zero, with any remaining amount being paid out as a refund.

Nonrefundable Tax Credit

A tax credit that can reduce the amount of tax owed to zero, but cannot result in a tax refund.

Tax Credit

A tax benefit that directly reduces the amount of tax owed dollar for dollar.