You Have Recently Been Hired to Improve the Performance of Multiplex

question 5

Multiple Choice

You have recently been hired to improve the performance of Multiplex Corporation which has been experiencing a severe cash shortage.As one part of your analysis, you want to determine the firm's cash conversion cycle.Using the following information and a 360-day year, what is your estimate of the firm's current cash conversion cycle? Current inventory = R120,000
Annual sales = R600,000
Accounts receivable = R160,000
Accounts payable = R25,000
Total annual purchases = R360,000
Purchases credit terms: net 30 days
Receivables credit terms: net 50 days

• A) 49 days
• B) 143 days
• C) 100 days
• D) 168 days
• E) 191 days

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Definitions:

Price Elasticity

An indicator showing the extent to which the demand for a product varies in response to a price change of that product, represented as a percentage variation.

Airplane Tickets

Documents issued by airlines that allow passengers to board an aircraft and travel from one destination to another.

Linear

A straight line used to represent a relationship between two variables, showing a constant rate of change from one variable to another.

Inverse Demand Function

Represents the price of a good as a function of its quantity demanded, showing the maximum price consumers are willing to pay for a given quantity of the good.