A Firm Has Arranged for a Lockbox System to Reduce

question 284

Multiple Choice

A firm has arranged for a lockbox system to reduce collection time of accounts receivable. Currently the firm has an average collection period of 43 days, an average age of inventory of 50 days, and an average payment period of 10 days. The lockbox system will reduce the average collection period by 3 days by reducing processing, mail, and clearing float. The firm's cash conversion cycle ________.

• A) increases by 3 days
• B) decreases by 3 days
• C) increases by 6 days
• D) decreases by 6 days

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Definitions:

Serotonergic Neurons

Neurons that produce and release serotonin, a neurotransmitter important for regulating mood, appetite, and sleep, among other functions.

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Drinking Coffee involves consuming a beverage made from roasted coffee beans, which is popular worldwide for its stimulating effects due to caffeine content.

Stretching

The process of gently extending muscles to improve flexibility and range of motion.

Basic Rest-activity Cycle

A circadian rhythm concept suggesting that individuals have intrinsic cycles of rest and activity, notably proposed by sleep researcher Nathaniel Kleitman.