The correct answer is C
The company cash cycle is negative
Cash conversion cycle = Inventory period + accounts receivable period – accounts payable period
Operating cycle period = Inventory period + accounts receivable period
So, cash conversion cycle = Operating cycle – accounts payable period
Now if the accounts payable period is longer than operating cycle then the cash conversion cycle would be negative.
Others option will simply not be correct in this scenario.
10. If a company's account payable period is longer than its operating cycle, then which of...
10. If a company's account payable period is longer than its operating cycle, then which of the following is most likely to be true: A) the company can avoid paying corporate taxes on earnings retained as cash. B) the company's future cash flows will increase at a steady rate. C) the company's cash cycle is negative D) the company pays for its inventory before it receives payments for its sales E) the company's cash cycle is longer than its operating...
If a company’s account payable period is longer than its operating cycle, then which of the following is most likely to be true: A) the company can avoid paying corporate taxes on earnings retained as cash. B) the company’s future cash flows will increase at a steady rate. C) the company’s cash cycle is negative D) the company pays for its inventory before it receives payments for its sales E) the company’s cash cycle is longer than its operating cycle.
9. Which one of these statements is correct? A) Total revenues generally decrease if both the quantity sold and the price per unit increase when credit is granted. B) A firm's cash cycle generally decreases when it switches from a cash to a credit policy, all else equal. C) A firm may have to increase its long-term borrowing if it decides to grant credit to its customers D) Most customers will forgo the discount and pay at the end of...
4. In order to receive the special dividend that the firm announced on July 20, 2020, what is the latest date on which you have to purchase the firm’s stock, which is publicly traded in the US markets only? A) End of Day of the Declaration date B) The day before the Ex-dividend date C) End of Day of the Record date D) End of Day of the Ex-dividend date E) The day before the Record date 9. Which one...
The account Sales Tax Payable represents a company's liability to the government for sales taxes collected. True O False Peter Inc. manufactures and sells computer monitors with a three-year warranty. Warranty costs are expected to average 8% of sales during the warranty period. The following table shows the sales and actual warranty payments during the first two years of operations: (Click to view the sales and actual warranty payments during the first two years of operations.) Based on these facts,...
A debit would make which of the following accounts increase? Common Stock Inventory Notes Payable Retained Earnings Consider the following journal entry: Software 18,000 Cash 7,200 Note Payable 10,800 Which of the following explanations best describes this journal entry? A) The company buys $18,000 of software, pays cash of $7,200, and signs a note for $10,800. B) The company receives $7,200 in cash and $10,800 in notes payable in exchange for selling $18,000 of software. C) The company...
Consider the following data from a company's 95-day operating cycle: Payable days: 8 Receivable days: 25 Inventory days: 70 What is the cash conversion cycle for this company? 47 87 53 103
with show work please If a company reports operating profit of $70 million, earns net income of $50 million in Year 8. has 20 million shares of common stock outstanding, pays a dividend of $1.50 per share, and has annual interest costs of $15 million--all in Year 8, then the company's total earnings for Year 8 would be $10 million (net income of $50 million less interest costs of $10 million less dividend payments of $30 million = $10 million)....
Q- A project which has a payback period longer than its life also has a positive NPV. True False
Obligations to be paid within one year or the company's operating cycle, whichever is longer, are: Multiple Choice Ο O Current liabilities Ο Operating cycle liabilities Ο Ο O Current assets. Ο Earned revenues All of the following statements regarding uncertainty in liabilities are true except Multiple Choice ) A company can be aware of an obligation but not know how much will be required to settle it A company can create alability with a known amount even when the...