Margetis Inc

question 106

Multiple Choice

Margetis Inc.carries an average inventory of $750,000.Its annual sales are $10 million,its cost of goods sold is 75% of annual sales,and its receivables collection period is twice as long as its inventory conversion period.The firm buys on terms of net 30 days,and it pays on time.Its new CFO wants to decrease the cash conversion cycle by 10 days,based on a 365-day year.He believes he can reduce the average inventory to $647,260 with no effect on sales.By how much must the firm also reduce its accounts receivable to meet its goal in the reduction of its cash conversion cycle?

• A)$123,630
• B)$130,137
• C)$136,986
• D)$143,836
• E)$151,027

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Definitions:

Third Ventricle

A median cleft between the two halves of the brain that is filled with cerebrospinal fluid.

First Ventricle

Also known as the left ventricle, a chamber of the heart responsible for pumping oxygenated blood to the aorta and systemic circulation.

Limbic System

A complex system of nerves and networks in the brain, involved with instinct and mood, controlling basic emotions, and drives such as fear and pleasure.

Basic Survival Instincts

The innate, automatic behaviors and responses aimed at preserving one’s life and well-being.