CIMA Exam CIMAPRA19-F01-1 Topic 2 Question 66 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam

Question #: 66
Topic #: 2

PZ has the following working capital ratios:

Which of the following could be the reason for the movements?

APZ has introduced a new policy to take discounts from suppliers during 20X1.

BThe workforce of PZ have been on strike for a month during 20X1 but deliveries of inventory have still been received by the entity.

CA new credit controller has been employed who has been more rigorous with their collection procedure of receivables.

DPZ has implemented a just-in-time system of ordering inventory during 20X1.

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Suggested Answer: C

by Alline at Feb 26, 2023, 01:21 AM

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Leonard

6 days ago

I'm not sure about the strike situation. Even if deliveries were still received, the workforce being on strike for a month would likely have some impact on the working capital ratios.

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Lacresha

9 days ago

Just-in-time inventory management could also be a valid explanation. It helps reduce the amount of cash tied up in inventory, which would boost the working capital ratios.

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The new credit controller's rigorous collection procedure seems like the most likely reason for the improved working capital ratios. It's impressive how they were able to collect receivables more efficiently.

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Nell

18 days ago

That's a good point, the just-in-time system could definitely impact working capital ratios.

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Mertie

24 days ago

I disagree, I believe it's because of the just-in-time system of ordering inventory.

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Nell

25 days ago

I think the reason for the movements could be because of the new credit controller.

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CIMA Exam CIMAPRA19-F01-1 Topic 2 Question 66 Discussion

Contribute your Thoughts:

Leonard

Lacresha

Jonell

Nell

Mertie

Nell