Knowledge on cash conversion cycle
Course:- Managerial Accounting
Reference No.:- EM1349679

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Ferguson Inc., has annual sales of $36,500,000 or $100,000 a day on a 365-day basis. On average, the company has $8,000,000 in inventory and $12,000,000 in accounts receivable. Its CFO has proposed new policies that would result in a 20% reduction in average inventories and a 24% reduction in average accounts receivables. He also anticipates that these policies would reduce sales by 10%, while accounts payable would remain unchanged. What effect would these policies have on the company's cash conversion cycle? Round to the nearest whole day.

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