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)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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)
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)
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