Select Any One Of the Following Options: Average Payables Period of a firm in year 1 is 134 days, Year 2 is 109 days and Year 3 is 78 days. The trend MAY NOT indicate the following (Choose any one option)Suppliers of the firm may have tightened their credit terms over the last 3 years The firm may be facing difficulty in making timely payments to suppliers The firm may be comfortable on the liquidity front The firm may be keen to avail of cash discount
Question
Select Any One Of the Following Options: Average Payables Period of a firm in year 1 is 134 days, Year 2 is 109 days and Year 3 is 78 days. The trend MAY NOT indicate the following (Choose any one option)Suppliers of the firm may have tightened their credit terms over the last 3 years The firm may be facing difficulty in making timely payments to suppliers The firm may be comfortable on the liquidity front The firm may be keen to avail of cash discount
Solution
The statement that may not indicate the trend is "The firm may be facing difficulty in making timely payments to suppliers". The decreasing trend in the Average Payables Period suggests that the firm is paying its suppliers more quickly over time. This could be due to a variety of reasons such as improved cash flow, better management of payables, or taking advantage of early payment discounts. It does not necessarily indicate that the firm is having difficulty making payments on time.
Similar Questions
If a company has RM200,000 in Costs of goods sold, RM 15,000 inventories and RM 12,500 inventories. What is its average payment period?A.24 daysB.20.4134 daysC.24.8125 daysD.22.8125 days
The payable turnover is equal to 6, what is the average payment period?Select one:a.6 daysb.70 daysc.60 daysd.1/6 day
What is the payback period for the following set of cash flows? Year Cash Flow0 −$ 4,200 1 1,300 2 1,400 3 1,900 4 2,800 Multiple Choice2.81 years2.93 years2.74 years2.79 years3.09 years
The statement reports a firm’s financial operations over a particular period of time, usually a year, a quarter of a year, or a month. (Enter one word in the blank)
The implied annualized approximate trade credit cost for the following payment terms "2/10 net 60" is (assume 360 days in a year)
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.