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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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Bette
15 hours 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
6 days ago
I think option B might actually increase working capital needs since extending credit could lead to more outstanding receivables.
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