ABC Corporation has 9million in inventory and 8m in accounts receivable. A 20% reduction in inventories and accounts receivable is proposed. Sales would reduce by 10%, while the payables deferral period would remain at 35 days. A company has annual sales of 3.65m. The CGS is 75% of sales. Find the effect of the changes on the cash conversion cycle?

ABC Corporation has 9million in inventory and 8m in accounts receivable. A 20% reduction in inventories and accounts receivable is proposed. Sales would reduce by 10%, while the payables deferral period would remain at 35 days. A company has annual sales of 3.65m. The CGS is 75% of sales. Find the effect of the changes on the cash conversion cycle?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 2P

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