If Managers Could Automatically Change Each Term in the Equation

question 67

Multiple Choice

If managers could automatically change each term in the equation of the cash conversion cycle, which of the following would be expected to provide the most benefit?

• A)decrease numerator of each term by 10%
• B)decrease denominator of each term by 10%
• C)increase numerator of each term by 10%
• D)increase denominator of each term by 10%

---

Definitions:

Controllable Fixed Costs

Expenses that can be managed or influenced by decisions made by a company's management, such as advertising expenditures.

Operating Assets

Assets used by a business in its day-to-day operations to generate revenue.

Controllable Margin

A financial metric that represents the amount of profit or contribution margin that management can directly influence through its decisions.

Operating Assets

Assets that a business uses for its day-to-day operational activities to generate revenue, excluding investment and non-operational assets.