Other Things Held Constant, Which of the Following Would Tend

question 85

Multiple Choice

Other things held constant, which of the following would tend to reduce the cash conversion cycle?

• A) Maintain the same level of receivables as sales decline.
• B) Place larger orders for raw materials to take advantage of price breaks.
• C) Take all discounts that are offered.
• D) Do not take all discounts that are offered to get more trade credit.

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Definitions:

Inflation Rates

The rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of money.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed annually.

Three-Year Loan

A loan that is scheduled to be repaid in full, including interest and principal, over a period of three years.

Print Money

Refers to the process by which a country's central bank creates money, often leading to inflation if done excessively.