A Firm Is Considering the Following Changes: Increasing Inventory Variety

question 8

Essay

A firm is considering the following changes: increasing inventory variety which will increase average inventory by $10,000, and offering more liberal sales terms which will result in average receivables increasing to $65,000.These actions are expected to increase sales to $800,000 per year, and cost of goods will remain at 75%.Because of the increased purchases, average payables will increase to $35,000.What effect will these changes have on the cash conversion cycle?

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Definitions:

Crowdsourcing

The practice of obtaining information, ideas, or content by soliciting contributions from a large group of people, especially from an online community.

Online Community

A group of individuals who interact through specific internet platforms or forums, sharing common interests or goals.

Fraudulent Schemes

Illegal plans or operations intended to deceive or cheat individuals or organizations out of money or other benefits.

Brand Image

The perception or impression of a company or product held by the public, shaped by branding and marketing efforts.