If Creditors Allow 30 Days from the Date of Purchase

question 57

Multiple Choice

If creditors allow 30 days from the date of purchase before requiring payment,it takes,on average 40 days to sell inventory,and debtors take,on average,45 days to pay their accounts,the length of the cash cycle is:

• A)55 days
• B)85 days
• C)115 days
• D)45 days

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Definitions:

Reorganization

A process aimed at restructuring a company's operations, structures, and finances to increase efficiency and profitability, often used in bankruptcy contexts.

Voluntary

Done, given, or acting of one's own free will without valuable consideration or legal obligation.

Involuntary

Occurring without the individual's consent or control, often referring to actions or responses not dictated by an individual's conscious choices.

Bankruptcy Abuse Prevention

A set of laws or measures designed to prevent individuals or entities from wrongfully or fraudulently declaring bankruptcy to avoid debt obligations.