Which of the Following Would Result in a Negative Cash

question 126

Multiple Choice

Which of the following would result in a negative cash conversion cycle?

• A) A negative cash conversion cycle is not possible.
• B) Average collection period 7 days, inventory conversion period 30 days, payables deferral period 30 days.
• C) Average collection period 60 days, inventory conversion period 30 days, payables deferral period 7 days.
• D) Average collection period 7 days, inventory conversion period 30 days, payables deferral period 60 days.

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Definitions:

Par Value

The face value of a bond or stock, as determined at the time of issuance.

Reverse Stock Split

A reverse stock split is an action taken by a corporation to reduce the number of its current shares in the market, thereby increasing the share price.

Market Price

The current price at which an asset or service can be bought or sold in a competitive and open market.

Shares Outstanding

Represents the total number of a company's shares that are currently owned by shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.