Viron Corporation has a cash conversion cycle of 100 days and a bank credit line of $5 million at 5% interest rate to fund its investment in inventory and accounts receivable. Viron seeks to reduce in cash conversion cycle to 70 days by substantially increasing the inventory turnover. Which of the following is true regarding this reduction? A. The company's cash flow from operations will increase B. Interest paid on the credit line will be reduced C. GAAP net income will increase D. All of the above are correct
Viron Corporation has a cash conversion cycle of 100 days and a bank credit line of $5 million at 5% interest rate to fund its investment in inventory and accounts receivable. Viron seeks to reduce in cash conversion cycle to 70 days by substantially increasing the inventory turnover. Which of the following is true regarding this reduction? A. The company's cash flow from operations will increase B. Interest paid on the credit line will be reduced C. GAAP net income will increase D. All of the above are correct
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 11P
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