Which of the Following Statements Is NOT True

question 32

Multiple Choice

Which of the following statements is NOT true?

• A) The cash conversion cycle begins when a firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.
• B) The cash conversion cycle begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.
• C) To measure the cash conversion cycle, we need another measure called the days' payables outstanding.
• D) The cash conversion cycle ends not with the finished goods being sold to customers and the cash collected on the sales; but when you take into account the time taken by a firm to pay for its purchases.

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Definitions:

Federal Reserve Bank

One of the 12 regional banks in the Federal Reserve System of the United States, which serves as the central bank of the country.

Commercial Banks

Financial institutions that offer a wide range of services, including deposits, loans, and other financial products to both individuals and businesses.

Market Interest Rate

The prevailing rate of interest determined by supply and demand in the financial markets that borrowers must pay to lenders.

Banks and Thrifts

Financial institutions that accept deposits from the public and create credit. Thrifts, such as savings and loan associations, primarily focus on residential mortgage lending.