Fontana Painting Had the Following Data for the Most Recent

question 79

Multiple Choice

Fontana Painting had the following data for the most recent year (in millions) .The new CFO believes that the company could improve its working capital management sufficiently to bring its NWC and CCC up to the benchmark companies' level without affecting either sales or the costs of goods sold.Fontana finances its net working capital with a bank loan at an 8% annual interest rate,and it uses a 365-day year.If these changes had been made,by how much would the firm's pre-tax income have increased?

• A) 1,901
• B) 2,092
• C) 2,301
• D) 2,531
• E) 2,784

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Definitions:

Petty Cash

A small amount of cash on hand that is used for paying small expenses in an organization.

Cash Short And Over

An accounting term that represents the discrepancies between the recorded amount of cash and the actual amount of cash available, indicating either a surplus or a shortfall.

Sales

Revenue generated from the selling of goods or services.

Invoices

Documents issued by a seller to a buyer that specify the goods or services provided, their prices, and payment terms.