Porta Stadium,Inc

question 76

Multiple Choice

Porta Stadium,Inc.has annual sales of $50,000,000.Its cost of goods sold equals 80 percent of sales,and the company keeps $10,000,000 of inventory on hand.On average,the firm has accounts receivable of $7,500,000.The firm buys all raw materials on credit,its trade credit terms are net 30 days,and it pays on time.The firm's managers are searching for ways to shorten the cash conversion cycle.If sales can be maintained at existing levels,but inventory can be lowered by $2,000,000 and accounts receivable lowered by $833,333,what will be the net change in the cash conversion cycle? Use a 360-day year.

• A) +114 days
• B) −114 days
• C) +24 days
• D) −24 days
• E) −90 days

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Definitions:

Methanol

A simple alcohol with the formula CH3OH, used as a solvent and as an antifreeze in fuel.

Products

The outcomes or substances resulting from a chemical reaction, which can be different in physical and chemical properties from the reactants.

Kinetic Control

A condition in which the rate at which reactants are converted into products determines the predominant product, influenced by factors like temperature and reaction time.

HBr

A corrosive, gaseous compound used in the production of inorganic and organic bromine compounds and as a catalyst in some types of chemical reactions.