AFP
CTP · Question #484
(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'…
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.
How the community answered
(52 responses)- A8% (4)
- B4% (2)
- C73% (38)
- D15% (8)
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