Which One of the Following Statements Is Correct Concerning the Accounts

question 32

Multiple Choice

Which one of the following statements is correct concerning the accounts payable period?

• A)managers generally prefer a shorter accounts payable period than a longer one
• B)extending the accounts payable period effectively decreases the cash needs of a firm
• C)increasing the accounts payable turnover rate increases the accounts payable period
• D)an increase in the accounts payable period will increase the operating cycle,all else equal
• E)the accounts payable period is equal to the cost of goods sold divided by the average accounts payable

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Definitions:

Time To Expiration

The duration remaining before an option or other derivative contract ceases to be valid and the holder must exercise their rights.

Stock Price

The cost at which a single share of a company's stock is bought or sold in the market.

Stock Volatility

A statistical measure of the dispersion of returns for a given security or market index, indicating how much and how quickly the value of a security or market index changes.

Exercise Price

The cost at which an option's holder may purchase (if it's a call option) or sell (if it's a put option) the asset underneath.