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Match List - I with List - II.

List - IList - II
(A) Production cycle(I) Is reflected in a higher inventory turnover ratio
(B) Credit allowed(II) Reduces the need of working capital
(C) Operating efficiency(III) Increases the need of working capital
(D) Credit availed(IV) Time span between receipt of raw material and their conversion into finished goods

Choose the correct answer from the options given below :

Solution

Correct Option: 2

Production cycle is the time span between receipt of raw material and conversion into finished goods, so (A)-(IV). Credit allowed to customers increases the need for working capital, so (B)-(III). Operating efficiency is reflected in a higher inventory turnover ratio, so (C)-(I). Credit availed from suppliers reduces the need for working capital, so (D)-(II).

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