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 itsreceivables 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 newCFO 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 $635,450with 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 conversioncycle? Do not round your intermediate calculations.O a. $11,650Ob.$11,417O$13,980Od $11,767Oe. $13,398

Variables in the question: Average inventory=$750000Annual sales=$10,000,000COGS=$7500000 (75% of…

Answered: Margetis Inc. carries an average…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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