Correct regarding cash conversion cycle

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1. Which of the following statements is CORRECT regarding cash conversion cycle?

A. Other things held constant, it is better to have a relatively short than a relatively long cash conversion cycle.

B. Net working capital is defined as current assets plus current liabilities.

C. Other things held constant, the length of the cash conversion cycle has no effect on a firm’s profitability.

D. Other things held constant, the length of the cash conversion cycle might have an effect on a firm’s profitability, but it is impossible to state if that effect is positive or negative.

2. They expect to pay the new shares equivalent of $9 dividend per share and expect the stock to be priced at $120 in four years. The market required rate of return is estimated to be 18 per cent. What is value of the stock today?

Reference no: EM132037324

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