Kiley Corporation Had the Following Data for the Most Recent

question 95

Multiple Choice

Kiley Corporation had the following data for the most recent year (in millions) .The new CFO believes (1) that an improved inventory management system could lower the average inventory by $4,000, (2) that improvements in the credit department could reduce receivables by $2,000, and (3) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000.Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold.If these changes were made, by how many days would the cash conversion cycle be lowered? $\begin{array}{lrr}&\text { Original } & \text { Revised } \\\text { Annual sales: unchanged } & \$ 110,000 & \$ 110,000 \\\text { Cost of goods sold: unchanged } & \$ 80,000 & \$ 80,000 \\\text { Average inventory: lowered by } \$ 4,000 & \$ 20,000 & \$ 16,000 \\\text { Average receivables: lowered by } \$ 2,000 & \$ 16,000 & \$ 14,000 \\\text { Average payables: increased by } \$ 2,000 & \$ 10,000 & \$ 12,000 \\\text { Days in year } & 365 & 365\end{array}$

• A) 34.0
• B) 37.4
• C) 41.2
• D) 45.3
• E) 49.8

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Information that is available to the general public, accessible without any restrictions.

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The trading of a public company's stock or other securities by individuals with access to non-public, material information about the company.

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