Solution-Data for the most recent year

Data for the most recent year

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Reference no: EM131175227

Greak Corporation had the following data for the most recent year (in millions). The company's new CFO believes (1) that an improved inventory management system could lower the average inventory by $4,000, (2) that improvements in the credit department could reduce receivables by $2,000, and (3) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered?

	Original	Revised
Annual sales: unchanged	$110,000	$110,000
Cost of goods sold: unchanged	$80,000	$80,000
Average inventory: lowered by $4,000	$20,000	$16,000
Average receivables: lowered by $2,000	$16,000	$14,000
Average payables: increased by $2,000	$10,000	$12,000
Days in year	365	365

Select one:

a. 34.0

b. 37.4

c. 41.2

d. 45.3

e. 49.8

Reference no: EM131175227

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Data for the most recent year

Reference no: EM131175227

Reference no: EM131175227

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