Helena Furnishings Wants to Reduce Its Cash Conversion Cycle

question 82

Multiple Choice

Helena Furnishings wants to reduce its cash conversion cycle. Which of the following actions should it take?

• A) Increase average inventory without increasing sales.
• B) Take steps to reduce the DSO.
• C) Start paying its bills sooner, which would reduce the average accounts payable but not affect sales.
• D) Sell common stock to retire long-term bonds.
• E) Sell an issue of long-term bonds and use the proceeds to buy back some of its common stock.

---

Definitions:

Stolen Article

An item that has been taken without permission, leading to the loss of ownership or possession by the rightful owner.

Fair Market Price

The price of a good or service that is agreed upon by both buyer and seller, under conditions where both have reasonable knowledge of the pertinent facts and neither is under compulsion to transact.

Financial Loss

The decrease in monetary value resulting from an event, transaction, or series of transactions.

Greenmail

A strategy used to shake off a bidder’s hostile suit by offering to buy, at significantly higher cost, the portion of stock already owned by the bidder who is trying to take over the company.