365-day year. He believes he can reduce the average inventory to $627,465 with no effect on sales. By how much must the firm also reduce its accounts receivable to meet its goal in the reduction of its cash conversion cycle? a. $1,004 b. $943 c. $823 d. $1,224
365-day year. He believes he can reduce the average inventory to $627,465 with no effect on sales. By how much must the firm also reduce its accounts receivable to meet its goal in the reduction of its cash conversion cycle? a. $1,004 b. $943 c. $823 d. $1,224
Chapter16: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 11P
Related questions
Question
![3. Margetis Inc. carries an average inventory of $750,000. Its annual sales are $10 million, its cost of goods sold are 75%
of annual sales, and its receivables collection period is twice as long as its inventory conversion period. The firm buys on
terms of net 30 days, and it pays on time. Its new CFO wants to decrease the cash conversion cycle by 6 days, based on a
365-day year. He believes he can reduce the average inventory to $627,465 with no effect on sales. By how much must
the firm also reduce its accounts receivable to meet its goal in the reduction of its cash conversion cycle?
a. $1,004
b. $943
c. $823
d. $1,224
e. $763](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a2ab1af-80ed-43bd-84cc-1ad6ed2481ac%2F433e988f-95fc-4795-b33e-a4ebaaa39709%2F7ao03cj_processed.png&w=3840&q=75)
Transcribed Image Text:3. Margetis Inc. carries an average inventory of $750,000. Its annual sales are $10 million, its cost of goods sold are 75%
of annual sales, and its receivables collection period is twice as long as its inventory conversion period. The firm buys on
terms of net 30 days, and it pays on time. Its new CFO wants to decrease the cash conversion cycle by 6 days, based on a
365-day year. He believes he can reduce the average inventory to $627,465 with no effect on sales. By how much must
the firm also reduce its accounts receivable to meet its goal in the reduction of its cash conversion cycle?
a. $1,004
b. $943
c. $823
d. $1,224
e. $763
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