Soenen Inc

question 20

Multiple Choice

Soenen Inc.had the following data for last year (in millions) .The new CFO believes that the company could improve its working capital management sufficiently to bring its net working capital and cash conversion cycle up to the benchmark companies' level without affecting either sales or the costs of goods sold.Soenen 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:

Rescission

Rescission is the legal act of canceling or terminating a contract, returning all parties involved to their positions before the contract was entered into.

Misrepresentation

A false statement or lie that induces someone to enter into a contract.

Xerox Copier

A brand of photocopier machines known for their document copying capabilities, often used generically to refer to photocopying.

Maintenance-Free

Products or systems designed to operate without needing regular maintenance or care from the user.