Multiple Choice
If a company makes a profit of 15\% on every faucet sold and the selling price of one shower faucet is \$120, what is the profit on one shower faucet?
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4. Merchandising Operations
Net Sales
Multiple Choice
Which of the following is the fastest way for a business to improve its cash inflow related to net sales?
A
Offer discounts for early payment to customers
B
Increase advertising expenses
C
Extend longer credit terms to customers
D
Delay billing customers for sales
Verified step by step guidance1
Understand the concept of cash inflow: Cash inflow refers to the money received by a business, often from sales, investments, or financing activities. Improving cash inflow means accelerating the receipt of cash into the business.
Analyze the options provided: Each option impacts cash inflow differently. For example, offering discounts for early payment incentivizes customers to pay sooner, while extending longer credit terms delays cash inflow.
Evaluate the impact of offering discounts for early payment: This strategy encourages customers to pay their invoices before the due date, improving cash inflow by reducing the time it takes to receive payments.
Consider the effect of increasing advertising expenses: While advertising may boost sales in the long term, it does not directly or immediately improve cash inflow related to net sales.
Assess the other options: Extending longer credit terms delays cash inflow, and delaying billing customers postpones the receipt of cash. Both of these options negatively impact cash inflow compared to offering discounts for early payment.
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