A Firm with a Cash Conversion Cycle of 175 Days

question 99

Multiple Choice

A firm with a cash conversion cycle of 175 days can stretch its average payment period from 30 days to 45 days. This will result in a/an ________.

• A) decrease of 30 days in the cash conversion cycle
• B) increase of 15 days in the cash conversion cycle
• C) decrease of 15 days in the cash conversion cycle
• D) increase of 30 days in the cash conversion cycle

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Definitions:

Capitalist Incomes

The earnings derived from capital investments, such as profits, rental income, and interest, within a capitalist economic system.

Backflows

The reverse movement of water, contaminants, or other substances into the potable water supply due to a change in pressure.

Financial Payments

Monetary transactions involving the transfer of sums between parties, usually in exchange for goods, services, or to fulfill contractual obligations.