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2. Tortellini Inc. payables policy is being revised. It has an annual c P50,735,000, an inventory level of P15,012,000, and an accounts P10,008,000. The cost of goods sold for the company is 85 percen ransactions are made on credit, and payments are always made on the 30t t now intends to fully use trade credit and pay its suppliers on the 40th also assumes that sales can be sustained at the current pace, but inventor eceivable can be reduced by P1.946.000 and P1.946.000, respectively,

2. Tortellini Inc. payables policy is being revised. It has an annual c P50,735,000, an inventory level of P15,012,000, and an accounts P10,008,000. The cost of goods sold for the company is 85 percen ransactions are made on credit, and payments are always made on the 30t t now intends to fully use trade credit and pay its suppliers on the 40th also assumes that sales can be sustained at the current pace, but inventor eceivable can be reduced by P1.946.000 and P1.946.000, respectively,

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2. Tortellini Inc. payables policy is being revised. It has an annual overall sales of P50,735,000, an inventory level of P15,012,000, and an accounts receivable of P10,008,000. The cost of goods sold for the company is 85 percent of sales. All transactions are made on credit, and payments are always made on the 30th day. However, it now intends to fully use trade credit and pay its suppliers on the 40th day. The CFO also assumes that sales can be sustained at the current pace, but inventory and accounts receivable can be reduced by P1,946,000 and P1,946,000, respectively. What would be the net change in the cash conversion cycle if the year is 365 days long?
Transcribed Image Text:2. Tortellini Inc. payables policy is being revised. It has an annual overall sales of P50,735,000, an inventory level of P15,012,000, and an accounts receivable of P10,008,000. The cost of goods sold for the company is 85 percent of sales. All transactions are made on credit, and payments are always made on the 30th day. However, it now intends to fully use trade credit and pay its suppliers on the 40th day. The CFO also assumes that sales can be sustained at the current pace, but inventory and accounts receivable can be reduced by P1,946,000 and P1,946,000, respectively. What would be the net change in the cash conversion cycle if the year is 365 days long?
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