A company currently has a 45-day cash cycle. Assume that the company makes operational changes that reduce its receivables period by 5 days, increase its inventory period by 3 days, and reduce its payables period by 2 days. What will the new length of the cash cycle be after these changes? How did you calculate it?
A company currently has a 45-day cash cycle. Assume that the company makes operational changes that reduce its receivables period by 5 days, increase its inventory period by 3 days, and reduce its payables period by 2 days. What will the new length of the cash cycle be after these changes? How did you calculate it?
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter21: Cash Budgeting (cashbud)
Section: Chapter Questions
Problem 5R: The following four suggestions have been made to improve the company’s cash position. Evaluate the...
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Transcribed Image Text:A company currently has a 45-day cash cycle. Assume
that the company makes operational changes that reduce
its receivables period by 5 days, increase its inventory
period by 3 days, and reduce its payables period by 2
days. What will the new length of the cash cycle be after
these changes? How did you calculate it?
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