Ithaca Iron Has Annual Operating Outlays of $3,800,000 and a Cash

question 136

Multiple Choice

Ithaca Iron has annual operating outlays of $3,800,000 and a cash conversion cycle of 50 days. If the firm currently pays 10 percent for negotiated financing and reduces its cash conversion cycle to 45 days, the annual savings is closest to

• A) $5,000.
• B) $10,000.
• C) $26,000.
• D) $16,000.

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Definitions:

Variable Pay

Compensation that is dependent on performance or results achieved, as opposed to fixed salaries, incentivizing employees to achieve organizational goals.

Outsourcing Compensation

The practice of hiring external entities to manage compensation and benefits planning, often to optimize costs.

Outsourcing Policy

A strategic decision by a company to use external resources to perform tasks, handle operations or provide services that are either difficult to manage or outside of the company's core competencies.

Administration

The process or activity of running a business or organization, including management of operations, finances, and personnel.