Ally Manufacturing Has an Average Accounts Payable Balance of $420,000

question 74

Multiple Choice

Ally Manufacturing has an average accounts payable balance of $420,000. Its average annual cost of goods sold is $10,220,000. It receives terms of 2/15 net 30 from its suppliers. Is Ally managing its accounts payables well?

• A) Yes, since it, on average, chooses not to take the discount, but pays when payment is due.
• B) Yes, since it, on average, takes the discount, and pays at the end of the discount period.
• C) Yes, since it, on average, stretches payment beyond the due payment date.
• D) No, since it, on average, does not take advantage of the discount period and pays well before payment is due.

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Definitions:

Investors

Entities or persons who invest resources anticipating a financial gain in return.

Social Responsibility

The practice of producing goods and services in a way that is not harmful to society or the environment and actively contributing to the well-being of global and local communities.

Charitable Contributions

Donations made by individuals or organizations to charitable causes for altruistic purposes.

Community Service

Community Service is volunteer work performed for the benefit of the community without monetary compensation, often mandated by courts or as a requirement by educational institutions.