Other things held constant, which of the following would tend to reduce the cash conversion cycle? A) Carry a constant amount of receivables as sales decline. B) Place larger orders for raw materials to take advantage of price breaks. C) Take all discounts that are offered. D) Continue to take all discounts that are offered and pay on the net date. E) Offer longer payment terms to customers. Part 2: Which of the following statements is CORRECT? A) Net working capital is defined as current assets minus the sum of payables and accruals, and any increase in the current ratio automatically indicates that net working capital has increased. B) Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing. C) If a company follows a policy of "matching maturities," this means that it matches its use of common stock with its use of long-term debt as opposed to short-term debt. D) Net working capital is defined as current assets minus the sum of payables and accruals, and any decrease in the current ratio automatically indicates that net working capital has decreased. E) If a company follows a policy of "matching maturities," this means that it matches its use of short-term debt with its use of long-term debt. Part 3: Which of the following is NOT a situation that might lead a firm to increase its holdings of short-term marketable securities? A) The firm must make a known future payment, such as paying for a new plant that is under construction. B) The firm is going from its peak sales season to its slack season, so its receivables and inventories will experience a seasonal decline. C) The firm is going from its slack season to its peak sales season, so its receivables and inventories will experience seasonal increases. D) The firm has just sold long-term securities and has not yet invested the proceeds in operating assets. E) The firm just won a product liability suit one of its customers had brought against it.