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:

Ability to Taste

The sensory function that enables an organism to detect and identify different flavors, facilitated by taste buds on the tongue.

Upper Respiratory Tract Infection

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Abnormal growths of cells within or around the brain, which can be benign (non-cancerous) or malignant (cancerous).

Exposure to Drugs

The act of coming into contact with drugs or pharmaceutical compounds, which can affect an organism's physiological state.