A Firm Has Annual Operating Outlays of $1,800,000 and a Cash

question 170

Multiple Choice

A firm has annual operating outlays of $1,800,000 and a cash conversion cycle of 60 days. If the firm currently pays 12 percent for negotiated financing and reduces its cash conversion cycle to 50 days, the annual savings is

• A) $50,000.
• B) $200,000.
• C) $ 6,000.
• D) $216,000.

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Definitions:

Inventory

The complete list of goods and materials that a business holds, either for sale or as part of its supply chain.

Accounting Equation

The fundamental principle of accounting represented as Assets = Liabilities + Shareholder's Equity, ensuring that a company's balance sheet is balanced.

Accounts Payable-HST

Liabilities owed by a business for goods and services that have been received but not yet paid for, specifically relating to Harmonized Sales Tax (HST) payables.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, ending with net income or loss.