A firm has $75,000 of cost of goods sold and $5,000 of accounts payable. Assume there are 365 days a year, the firm's payables deferral period (PDP) is 24.33 days. The firm's new CFO believes that the firm could delay the payments of accounts payable to increase its PDP (without affecting cost of goods sold) to 30 days. If this could be done, by how much cash would be freed up due to increase in accounts payable?
. A firm has $75,000 of cost of goods sold and $5,000 of accounts payable. Assume there are 365 days a year, the firm's payables deferral period (PDP) is 24.33 days. The firm's new CFO believes that the firm could delay the payments of accounts payable to increase its PDP (without affecting cost of goods sold) to 30 days. If this could be done, by how much cash would be freed up due to increase in accounts payable?
3. Which of the following statements is NOT correct?
Question 13 options:
In practice, most firms operate under conditions of capital rationing because they have more acceptable independent projects than they can fund. |
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The before-tax cost of debt is used as the component cost of debt for purposes of developing the firm's weighted average cost of capital. |
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The capital structure that minimizes a firm's weighted average cost of capital also maximizes its stock price. |
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New common stock is typically the most expensive form of equity, followed by |
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