Which of the Following Actions Would Be Likely to Shorten

question 32

Multiple Choice

Which of the following actions would be likely to shorten the cash conversion cycle?

• A) Change the credit terms offered to customers from 3/10 net 30 to 1/10 net 50.
• B) Begin to take cash discounts on inventory purchases; the terms are 2/10 net 30.
• C) Adopt a new manufacturing process that saves some labor costs but slows down the conversion of raw materials to finished goods from 10 days to 20 days.
• D) Change the credit terms offered to customers from 2/10 net 30 to 1/10 net 60.
• E) Adopt a new manufacturing process that speeds up the conversion of raw materials to finished goods from 20 days to 10 days.