Using the Information Provided,what Is the Collection Cycle for the Firm

question 56

Multiple Choice

Using the information provided,what is the collection cycle for the firm? Perfect Purchase Electronics
Selected Income Statement Items,2014
Cash Sales $1,500,000
Credit Sales $7,500,000
Total Sales $9,000,000
COGS $6,000,000
Perfect Purchase Electronics
Selected Balance Sheet Accounts
12/31/2014 12/31/2013 Change
Accounts Receivable $270,000 $240,000 $30,000
Inventory $125,000 $100,000 $25,000
Accounts Payable $110,000 $90,000 $20,000

• A)6.84 days
• B)7.60 days
• C)10.34 days
• D)12.41 days

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Definitions:

Capital

Refers to wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.

Labor

The effort by humans to produce goods or provide services in the economy, often measured in terms of hours worked or output produced.

Metal Alloy

A mixture of two or more elements, where at least one is a metal, created to enhance properties such as strength, durability, or resistance to corrosion.

Zinc

A chemical element with the symbol Zn and atomic number 30, often used for galvanizing iron and steel to protect against rust.