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A fiRm Has Days' Sales in Inventory of 105 Days

question 252

Essay

A firm has days' sales in inventory of 105 days, an average collection period of 35 days, and takes
42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply
about the firm's operations and its cash flows?


Definitions:

Whistleblower

An individual who exposes information or activity that is deemed illegal, unethical, or not correct within an organization.

Governmental Inefficiency

The inability of a government to achieve its objectives due to wasted resources, poor management, or unnecessary bureaucracy.

Illegal Action

Activities or behaviors that are prohibited by law and subject to legal penalties upon conviction.

Freedom of Information Act

A law that grants the public the right to request access to records from any federal agency, promoting transparency in government.

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