A Firm Is Considering Changing Their Credit Terms

question 40

Multiple Choice

A firm is considering changing their credit terms.It is estimated that this change would result in sales increasing by $1,000,000.This in turn would cause inventory to increase by $150,000,accounts receivable to increase by $100,000,and accounts payable to increase by $75,000.What is the firm's expected change in net working capital?

• A)$1,175,000
• B)$325,000
• C)$250,000
• D)$175,000
• E)$150,000

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Definitions:

User Charge

A fee paid for the use of a public service or facility, typically aimed at recovering the cost of providing the service.

Persons Pay

The concept that individuals bear the financial cost of accessing a service or securing a good.

Benefit Received

The advantage or gain obtained by an individual or entity from a service, good, or action.

Public Education

A government-funded educational system that is free or low-cost for its citizens, accessible to all children and adolescents.