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CIMAPRA19-F02-1 Exam - Topic 1 Question 130 Discussion

Which of the following actions should XY's management take in order to reduce its investment in working capital?
A) Sell its long-term investments and use the proceeds to reduce its bank overdraft.
B) Extend credit terms with its trade customers.
C) Scrap its obsolete inventory and replace with new inventory.
D) Pay trade suppliers more quickly to take advantage of prompt payment discounts.

CIMAPRA19-F02-1 Exam - Topic 1 Question 130 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 130
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

Which of the following actions should XY's management take in order to reduce its investment in working capital?

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Suggested Answer: A

by Elena at Jul 19, 2026, 03:07 AM

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Carin
3 days ago
But it could reduce the overdraft quickly.
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Samira
9 days ago
I think option A is risky. Selling long-term investments?
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Trinidad
14 days ago
Totally agree, prompt payment discounts can really help!
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Celestina
19 days ago
Wait, paying suppliers faster to save money? That sounds off.
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Carolynn
24 days ago
Scrapping obsolete inventory is a must!
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Tonette
29 days ago
I think extending credit terms just increases risk.
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Carma
1 month ago
Selling long-term investments can free up cash.
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Sherell
1 month 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.
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Xenia
1 month 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.
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Bette
2 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.
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Tess
2 months ago
I think option B might actually increase working capital needs since extending credit could lead to more outstanding receivables.
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