If a Firm Decided to Speed Up Its Collection from Its

question 137

Multiple Choice

If a firm decided to speed up its collection from its customers by reducing the receivables period and kept the inventory period and payable period the same, then:

• A)Cash conversion cycle will increase
• B)Cash conversion cycle will decrease
• C)The firm's investment in working capital will be minimized
• D)Investment in working capital will be maximized

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Definitions:

Merchandise

Goods that are purchased for resale at a profit; the main product that a retailer sells.

Sales on Account

Transactions where goods are sold and payment is deferred to a future date; this is typically tracked through accounts receivable.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, before any purchases or sales have occurred.

Projected Sales

An estimate of the amount of revenue that a company expects to earn in a future period from the sale of goods or services.