How High Can Accounts Receivable Be Allowed to Grow Before

question 39

Multiple Choice

How high can accounts receivable be allowed to grow before the firm's receivables period exceeds 50 days if annual sales equal $5 million and the cash conversion cycle equals 75 days?

• A)$342,466
• B)$684,932
• C)$1,027,397
• D)$1,712,329 receivables period =

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Definitions:

Employee Earnings

The total amount of money paid to an employee by an employer, including wages, salaries, bonuses, and commissions.

Compensation

Payment or benefits provided to employees in exchange for their work or services.

Accrue a Liability

The process of recognizing liabilities that have been incurred but not yet paid or recorded in the financial statements.

Current Maturities

The portion of a company’s long-term debt that is due to be paid within the next fiscal year, often classified under current liabilities.