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Which of the following actions should XY's management take in order to reduce its investment in working capital?
Suggested Answer: A
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18 comments · newest first
LA
Laquita
15 days ago
I agree, but B could improve cash flow eventually.
CA
Carin
20 days ago
I feel A and C are more direct solutions.
SA
Samira
25 days ago
It’s about discounts, though. Could save money in the long run.
LA
Laquita
1 month ago
D seems counterproductive. Paying suppliers faster?
CA
Carin
1 month ago
C is a good idea too. Scrapping old inventory frees up space.
SA
Samira
1 month ago
True, but it might tie up cash longer.
LA
Laquita
2 months ago
Option B makes sense. Extending credit could boost sales.
CA
Carin
2 months ago
But it could reduce the overdraft quickly.
SA
Samira
2 months ago
I think option A is risky. Selling long-term investments?
TR
Trinidad
2 months ago
Totally agree, prompt payment discounts can really help!
CE
Celestina
2 months ago
Wait, paying suppliers faster to save money? That sounds off.
CA
Carolynn
2 months ago
Scrapping obsolete inventory is a must!
TO
Tonette
3 months ago
I think extending credit terms just increases risk.
CA
Carma
3 months ago
Selling long-term investments can free up cash.
SH
Sherell
3 months ago
I vaguely recall that selling long-term investments in option A could reduce liquidity, so I’m not convinced that’s a good move for working capital.
XE
Xenia
3 months ago
I'm not entirely sure, but I feel like paying suppliers faster in option D could help with discounts, which might offset some working capital.
BE
Bette
3 months ago
I remember a practice question where we discussed how scrapping obsolete inventory could free up cash, so maybe option C is the right choice here.
TE
Tess
3 months ago
I think option B might actually increase working capital needs since extending credit could lead to more outstanding receivables.