CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

If all other factors are equal, which one of the following actions is most apt to increase the cash balance of a firm?
A. Increasing the accounts payable turnover
B. Increasing the accounts receivable period
C. Reducing the length of cash cycle
Explanation: The other choices will increase the length of cash cycle and lower the cash balance.

User Contributed Comments 3

User Comment
soarer1 can someone explain?
migena cash conversion cycle => preferable as short as possible

hence CCC = 365/AR turnover + 365/Inv turnover - 365/AP turnover

AR turnover = Sales/avg AR
Inv turnover = COGS/avg Inv
AP turnover = COGS/avg AP
boddunah migena, very nice.succinct.
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