LeokLee Industries Has an Average Accounts Payable Balance of $720,000

question 12

Multiple Choice

LeokLee Industries has an average accounts payable balance of $720,000. Its average annual cost of goods sold is $8,760,000. It receives terms of 1/10 net 30 from its suppliers. Is LeokLee managing its accounts payables well?

• A) Yes, since it, on average, chooses not to take the discount, but pays when payment is due.
• B) Yes, since it, on average, takes the discount, and pays at the end of the discount period.
• C) Yes, since it, on average, stretches payment beyond the due payment date.
• D) No, since it, on average, does not take advantage of the discount period and pays well before payment is due.

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Definitions:

Target Return

The desired profit or yield that an investor aims to achieve on an investment over a specific period.

Pricing Strategy

A plan or approach used by businesses to set prices for their products or services, aiming to achieve maximum profitability.

Sales Orientation

A business approach that focuses primarily on the sale of products or services, rather than understanding and meeting the needs of the customers.

Pricing Strategy

A plan or method used by companies to determine the best price for their products or services to maximize profits and meet market demands.