If a Firm Has a Cash Cycle of 41 Days

question 24

Multiple Choice

If a firm has a cash cycle of 41 days and an operating cycle of 76 days, what is its average payment period?

• A) 52 days
• B) 29 days
• C) 117 days
• D) 35 days

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Definitions:

Average Total Cost

The total cost of production divided by the quantity produced, representing the average cost per unit of output.

Average Variable Cost

The cost of labor, material, or overhead that changes in direct proportion to the level of production or output.

Total Cost

The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.

Fixed Cost

A fixed cost is a business expense that remains constant regardless of the volume of goods or services produced by an entity.