A Firm Is Considering Changing Their Credit Terms

question 84

Multiple Choice

A firm is considering changing their credit terms. It is estimated that this change would result in sales increasing by $1,600,000. This in turn would cause inventory to increase by $125,000, accounts receivable to increase by $100,000, and accounts payable to increase by $90,000. What is the firm's expected change in net working capital?

• A) $1,735,000
• B) $315,000
• C) $225,000
• D) $135,000

Interpret financial data to make decisions about production and divisional performance.

Understand the concept of segment margin and its role in assessing divisional performance.

Analyze the impact of discontinuing product lines on overall profitability.

Calculate net operating income incorporating common fixed expenses.

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