A Firm Has a Cash Conversion Cycle of 60 Days

question 21

Multiple Choice

A firm has a cash conversion cycle of 60 days. Annual outlays are $12 million and the cost of negotiated financing is 12 percent. If the firm reduces its average age of inventory by 10 days, the annual savings is

• A) $104,000.
• B) $144,000.
• C) $28,800.
• D) $40,000.

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Definitions:

Healthcare Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured, either reimbursing the payments made to healthcare providers or directly paying providers.

Health-Care Expenditures

Refers to the total amount of spending on health care services and products in a given period, including public and private expenditures.

Government

An organized system that establishes rules and regulations and provides services to the community; it is responsible for the political direction and control over a community, society, state, or nation.

Insurance Companies

Businesses that provide coverage, mitigating financial risks through the pooling of premiums.