A Firm Can Reduce Its Cash Conversion Cycle by

question 76

Multiple Choice

A firm can reduce its cash conversion cycle by

• A)increasing its average age of inventory
• B)increasing its average collection period
• C)decreasing its average payment period
• D)none of the above

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Definitions:

Partial Balance Sheet

A snapshot of a portion of a company's financial position at a specific point in time, focusing on certain assets, liabilities, or equity sections rather than the complete picture.

Aging Process

A method used in accounting to categorize accounts receivable according to the length of time an invoice has been outstanding.

Accounts Receivable

Funds that are expected to be received by a company from its customers who have purchased goods or services on credit, essentially representing a line of credit extended by the business and recorded as an asset.

Income Statement Approach

The Income Statement Approach is a method used in accounting to create the income statement by focusing on revenues, expenses, and income to determine the net profit or loss for a period.