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:

Corporate Tax Rate

The percentage of a corporation's income that is paid to the government as tax.

CCA Class

In the context of Canadian taxation, a method to categorize depreciable property according to its class for the purpose of determining capital cost allowance rates.

Incremental Cash Flow

The additional cash flow a company receives from taking on a new project, considering both the inflows and outflows caused by the project.

Tax Rate

The percentage at which an individual or corporation is taxed; can refer to the nominal rate (before any deductions) or effective rate (after deductions).