What Is the Incremental Cash flOw Per Year from Switching

question 229

Multiple Choice

What is the incremental cash flow per year from switching credit policies?

• A) $415
• B) $475
• C) $525
• D) $1,225
• E) $1,750

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Inventory Turnover Ratio

A measure of how often a company sells and replaces its stock of goods during a period, calculated as cost of goods sold divided by average inventory.

Gross Profit

The difference between revenue and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

Net Sales

Revenue from goods or services sold minus returns, allowances, and discounts.