A Firm Is Considering Changing Their Credit Terms

question 43

Multiple Choice

A firm is considering changing their credit terms.It is estimated that this change would result in sales increasing by $1,000,000.This in turn would cause inventory to increase by $150,000,accounts receivable to increase by $100,000,and accounts payable to increase by $75,000.What is the firm's expected change in net working capital?

• A)$1,175,000
• B)$325,000
• C)$250,000
• D)$175,000

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Definitions:

Positive Reinforcement

A technique in behavior modification that involves the introduction of a desirable stimulus after a behavior to increase the likelihood of that behavior being repeated.

Learned Helplessness

A psychological condition where an individual learns to feel powerless and unable to avoid negative situations due to previous experiences of failure to do so.

Shocks

Sudden and often violent disturbances or fluctuations in physical or emotional states, or electrical discharges used in medical therapy or experimental research.

Barriers

Obstacles or structures that impede progress, communication, or physical movement in various contexts.