Other Factors Remaining Constant, a Decrease in the Average Age

question 192

Multiple Choice

Other factors remaining constant, a decrease in the average age of inventory will result in ________.

• A) a decrease in the average collection period
• B) a decrease in the cash conversion cycle
• C) an increase in the cash conversion cycle
• D) an increase in the average collection period

---

Definitions:

Present Value Factors

A set of coefficients used to calculate the present value of a future cash flow, considering a specific discount rate.

Effective Yield

A measure of the return on investment, taking into account the effect of compounding interest, unlike the nominal interest rate.

Floating-rate Debt

Debt instruments such as bonds or loans with variable interest rates that adjust periodically based on a benchmark interest rate or index.

Market Rates

Refers to the current interest rate or price available in the marketplace for financial instruments or commodities.