A company plans to make changes to increase sales. It will increase inventory by $40,000, and average receivables will rise to $120,000. These changes are expected to boost sales to $1,200,000 per year, with cost of goods staying at 75% of sales. Due to increased production needs, average payables will increase to $70,000. What effect will these changes have on the firm's cash conversion cycle? (use 365 days in year)
A company plans to make changes to increase sales. It will increase inventory by $40,000, and average receivables will rise to $120,000. These changes are expected to boost sales to $1,200,000 per year, with cost of goods staying at 75% of sales. Due to increased production needs, average payables will increase to $70,000. What effect will these changes have on the firm's cash conversion cycle? (use 365 days in year)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Need help with this accounting questions

Transcribed Image Text:A company plans to make changes to increase sales. It will
increase inventory by $40,000, and average receivables will
rise to $120,000. These changes are expected to boost sales
to $1,200,000 per year, with cost of goods staying at 75% of
sales. Due to increased production needs, average payables
will increase to $70,000. What effect will these changes have
on the firm's cash conversion cycle? (use 365 days in year)
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps

Recommended textbooks for you


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON

Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education

Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education