Margetis Inc

question 27

Multiple Choice

Margetis Inc.carries an average inventory of $750,000.Its annual sales are $10 million,its cost of goods sold are 75% of annual sales,and its receivables collection period is twice as long as its inventory conversion period.The firm buys on terms of net 30 days,and it pays on time.Its new CFO wants to decrease the cash conversion cycle by 6 days,based on a 365-day year.He believes he can reduce the average inventory to $635,450 with no effect on sales.By how much must the firm also reduce its accounts receivable to meet its goal in the reduction of its cash conversion cycle? Do not round your intermediate calculations.

• A) $11,650
• B) $11,767
• C) $13,398
• D) $13,980
• E) $11,417

---

Definitions:

Title Company

A company that specializes in examining and insuring titles to real estate properties.

Transfer of Title

The legal process of transferring ownership of a property or asset from one party to another.

Trade Fixtures

Personal property items attached to a property that are used in a trade or business and can be removed by the lessee when the lease ends.

Sublease

An agreement where the original tenant of a lease rents out their space to another party (the subtenant) for a period within the lease term.