Data from Dunshee Corporation's Most Recent Balance Sheet Appear Below

question 279

Multiple Choice

Data from Dunshee Corporation's most recent balance sheet appear below:
$\begin{array}{lrr}&\text { Year 2 } & \text { Year 1 } \\\text { Current assets: }\\\text { Cash}&\$ 130 & \$ 100 \\\text { Accounts receivable, net.}&270 & 290 \\\text {Inventory }&90 & 110 \\\text {Prepaid expenses }&10 & 10\\\text { Total current assets. }&\$500&\$510\\\text { Total current liabilities }&\$230&\$220\end{array}$ Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730.
-The average collection period for Year 2 is closest to:

• A) 1.1 days
• B) 0.9 days
• C) 84.3 days
• D) 87.3 days

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Definitions:

Excess Capacity

A scenario where a firm's actual production is less than its maximum potential output, often leading to inefficiencies and higher costs.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for competition based on factors other than just price, such as brand and quality.

Demand Curves

Graphical representations that show the relationship between the price of a good or service and the quantity demanded by consumers at various price levels.

Incumbent Firms

Established companies that currently dominate a sector or industry.