Last year the company reported a sale of USD 8 million and an inventory turnover ratio of 4. It is now opting for a new inventory system that is able to reduce the firm's inventory level and increase the firm's inventory turnover turnover ratio to 6 while maintaining the same level of sales. How much cash will be freed up?
Last year the company reported a sale of USD 8 million and an inventory turnover ratio of 4. It is now opting for a new inventory system that is able to reduce the firm's inventory level and increase the firm's inventory turnover turnover ratio to 6 while maintaining the same level of sales. How much cash will be freed up?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Last year the company reported a sale of
USD 8 million and an inventory turnover
ratio of 4. It is now opting for a new inventory
system that is able to reduce the firm's
inventory level and increase the firm's
inventory turnover
turnover ratio to 6 while
maintaining the same level of sales.
How much cash will be freed up?
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