Which of the Following Would Result in a Negative Cash

question 46

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 of 7 days, inventory conversion period of 30 days and payables deferral period of 30 days
• C)Average collection period of 60 days, inventory conversion period of 30 days, payables deferral period of 7 days
• D)Average collection period of 7 days, inventory conversion period of 30 days, payables deferral period of 60 days

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Definitions:

Free Markets

Economic systems in which the prices for goods and services are determined by the open market and consumers, without government intervention.

Moral-Hazard Problem

A situation in which one party engages in risky behavior knowing that it is protected against the risk because another party will incur any resulting costs.

Monitoring

The process of systematically observing, checking, and recording activities or data to ensure proper compliance or performance.

Moral Hazard Problem

The risk that one party to a transaction takes on more risk because it knows that the other party bears the consequences of those risks.