Helena Furnishings Wants to Reduce Its Cash Conversion Cycle Sharply

question 101

Multiple Choice

Helena Furnishings wants to reduce its cash conversion cycle sharply.Which action should it take?

• A)The company should increase its average inventory without increasing its sales.
• B)The company should reduce its DSO.
• C)The company should start paying its bills sooner, which reduces its average accounts payable without reducing its sales.
• D)The company should increase its DSO.

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Definitions:

Cash Dividends

A form of profit distribution by a corporation to its shareholders, paid out in cash.

Bonds Payable

The total amount owed by a corporation or government entity to bondholders at the balance sheet date, representing long-term debt.

Accounts Payable

The amount of money owed by a company to its suppliers or creditors for goods and services received but not yet paid for.

Investing Activity

Activities related to the purchase or sale of long-term assets and investments, a component of a company's cash flow statement.