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CTP · Question #484
CTP Question #484: Real Exam Question with Answer & Explanation
The correct answer is C. Extend payables deferral period.. See the full explanation below for the reasoning.
Question
- (Topic 5) A manufacturing company is working to improve its cash conversion cycle. Factory production has increased over the last year to increase inventory levels. They have an and a days' receivable of60. It has started enforcing its net 30 terms and placed customers with balances outstanding more than 45 days on credit hold. As a result, the company collected receivables quicker but it suffered a 10% loss in sales. What can the company do to reduce its cash conversion cycle?
Options
- APay vendors in advance.
- BDecrease the days' payable.
- CExtend payables deferral period.
- DRevise credit policy to be more lenient.
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